While most of us prefer to send money online or use a debit card to make purchases, in some situations, a physical payment may be needed. But cash and personal checks aren’t always the best option, especially when it comes to larger purchases, like a down payment on a home. What you may need in this situation is a cashier’s check or money order.
Some transactions require certified funds, meaning the money is guaranteed to get to the recipient. That’s where cashier’s checks and money orders come in, as they offer a quick and secure way to pay for something. But these two payment methods aren’t exactly the same. Learn the differences between the two so that you’ll know when to use one over the other.
What Is a Cashier’s Check?
A cashier’s check is an official check issued by a bank or credit union to a third party, usually on behalf of the bank customer. Since the check is basically written by the bank, the funds are verified, and the recipient can rest assured that the funds will be available. The difference between a personal check and a cashier’s check is that with a cashier’s check, a bank representative will sign it because the funds are drawn from the bank’s account. Whereas with a personal check, the customer signs it because the funds are withdrawn from their personal checking account.
How Does a Cashier’s Check Work?
When you buy a cashier’s check, the bank deducts the money from your checking or savings account and puts it in the bank’s account (if you’re not a customer of the bank, you can also pay in cash). The check is then made out to the recipient and signed by a representative of the bank. Some financial institutions cap the transaction amount, but in general, cashier’s checks don’t have a limit, so you can purchase one for $50 or $25,000, just as long as you have the funds in your account. Some banks will charge customers a fee to purchase a cashier’s check. Fees will vary across banks, but you can typically expect to pay around $10 for a cashier’s check. But make sure to check with your bank, as some will waive the fee for certain account holders, and other banks may offer them for free.
What Is a Money Order?
Money orders are essentially the same as cashier’s checks — they’re a secure way to send money to a third party. However, while cashier’s checks are backed by a bank, money orders aren’t. Money orders can be purchased at various locations, such as U.S. Postal Service (USPS) offices, drug stores, convenience stores, grocery stores, as well as banks and credit unions.
How Does a Money Order Work?
When you purchase a money order, you’ll need to provide the money upfront, just as you would a cashier’s check. You’ll typically need to pay for it using cash, a debit card, or traveler’s checks — typically, personal checks and credit cards won’t be accepted. Unlike cashier’s checks, money orders will have a maximum limit, usually around $1,000 (if you need a larger amount, you could purchase more than one money order). You’ll also be charged a transaction fee for a money order, but it tends to be cheaper than cashier’s checks. Depending on where you buy a money order from — and how much it’s for — the fee will vary, but you can typically expect to pay anywhere from less than $1 to $5.
Difference Between Cashier’s Checks and Money Orders
While cashier’s checks and money orders might seem synonymous on the surface, there are some key differences you should be aware of. So, let’s recap what we’ve learned.
|Cashier’s Check||Money Order|
|Issued by||A bank or credit union||Banks, credit unions, convenience stores, grocery stores, USPS, check-cashing stores|
|Backed by||A bank or credit union||A third party|
|Cashed at||Banks, credit unions, check-cashing stores, large retailers (like Walmart), some convenience stores||Banks, credit unions, convenience stores, grocery stores, USPS, check-cashing stores|
|Limits||Typically no limits||Typically up to $1,000|
|Fee||Around $10||Under $5|
|Safety||More secure||Slightly less secure|
|Expiration||No official expiration date (though some banks have a specific time frame for which funds are guaranteed)||No expiration date (but if they are 1 – 3 years old, the issuing body may charge fees to cash them)|
|Useful for||Payments larger than $1,000||Payments of $1,000 or less|
When to Use a Cashier’s Check or a Money Order
Determining whether or not you should purchase a cashier’s check or money order will come down to several factors. First and foremost, check with the recipient, as they might have specifications for how to send the money. For example, when leasing a rental, a landlord might request that you pay a security deposit by cashier’s check only — this can show that a potential tenant has a reliable bank account. If you have a choice of which to use, then you’ll want to consider the following:
- Are you using it for a large purchase? Because cashier’s checks typically have no limit of funds, they’ll probably be the better choice for a purchase over $1,000. You can purchase one cashier’s check for the amount you need instead of buying several money orders.
- Are you looking for the least expensive option? The fee for a money order will typically be less than that of a cashier’s check.
- Do you have easy access to a bank or credit union? If not, a money order will be easier to purchase, as they are available at several places: grocery stores, post offices, large retail stores, etc.
- Is safety a main concern? Cashier’s checks have more security features than a typical money order and are backed by a bank.
Can I cash a cashier’s check if I don’t have a bank account?
Most banks will allow you to cash a cashier’s check without an account at their institution, but be prepared to pay a fee. You may also be able to purchase a cashier’s check without a bank account, but you’ll need to pay for it in cash.
How safe is a cashier’s check?
Cashier’s checks are considered very safe and are generally thought of as more secure than money orders since they’re backed by banks. While there are check scams involving both cashier’s checks and money orders that you should be aware of, a cashier’s check has more security features than a money order.
Can I write on a cashier's check?
When you purchase a cashier’s check, the bank or financial institution will print all the information onto the check. This includes the name of the payee and the recipient, the check amount, and any memo notes. You don’t write anything yourself, and you can’t order a blank cashier’s check.
How long are cashier's checks good for?
Cashier’s checks don’t have an official expiration date. However, some banks have a specific time frame during which check funds are guaranteed. Check with the issuing bank to determine its protocol when it comes to the expiration of its cashier’s checks.
Cashier’s checks and money orders are a more secure alternative to personal checks or cash when it comes to paying a business or individual. If you’re considering using one over the other, remember to first ask the recipient what they prefer. Next, you’ll want to check the fees involved and maybe opt for the less expensive option. And, depending on how large of a purchase you’re looking at, it may determine if a cashier’s check or money order is right for you. Final note: Remember to keep your receipts or statements showing when the money order or cashier’s check was purchased in case it gets lost, stolen, or damaged.