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Money orders and cashier's checks are both secure payment alternatives to using cash or writing a personal check. Money orders are easily accessible, while you may need to have a bank account to get a cashier's check. Cashier's checks tend to be more trustworthy and don't have a $1,000 limit like money orders. Here's a closer look at each form of payment and how they differ.
What Is a Money Order?
A money order is a paper form of payment typically purchased with cash. With a typical limit of $1,000, money orders are often used to purchase goods or services when you need a more secure form of payment than cash or personal check. You can usually purchase a money order for just a few dollars at most post offices, check-cashing businesses, major retailers, grocery stores and convenience stores.
When you buy a money order, it will be made out to the recipient at the time of purchase and signed. You'll be provided with a receipt, and the money order can then be cashed or deposited by the recipient. You don't need a bank account to buy a money order, but you'll have to have enough cash on hand to cover the amount, plus any fees. Some issuers may also let you use a credit card, check or debit card to buy a money order.
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What Is a Cashier's Check?
A cashier's check, also known as a bank check, is a paper payment method you buy in exchange for cash, plus a fee. Cashier's checks must be purchased from a bank or credit union and are often only available to account holders, though some financial institutions will make exceptions for people without accounts. Cashier's checks are generally used to make large, secure payments, like buying a car from a private party.
For added security, cashier's checks are bank-guaranteed, making them more trustworthy than money orders. They're usually made out to the intended recipient and signed by two bank or credit union representatives; they may also feature a watermark. And unlike money orders, which have a $1,000 limit, you can usually get a cashier's check in any amount.
When you purchase a cashier's check at the bank, the funds are typically removed from your account immediately (or you can pay with cash if you don't have an account). Some banks may hold the funds in your account until the cashier's check is cashed. Fees on cashier's checks usually range from $10 to $20.
Money Order vs. Cashier's Check: What's the Difference?
Both cashier's checks and money orders can be convenient alternatives to paying cash or using a personal check—especially when you need to transfer money securely. But when deciding between using a cashier's check or money order, it's important to consider these key differences:
- Money orders cost less. Cashier's checks tend to come with a slightly higher fee than money orders.
- Money orders don't require a bank account. If you don't have a bank account, a money order may be your only option. But some banks do allow non-customers to purchase cashier's checks. Just be sure to contact the bank first.
- Cashier's checks may not be as convenient to purchase. Money orders can be picked up at your local grocery store, big box retailer and sometimes your bank. But cashier's checks are only available from banks or credit unions, which could be tricky if you don't have an account or a branch close by.
- Limits on cashier's checks aren't capped. Cashier's checks can often be purchased in any amount, whereas money orders typically have a $1,000 limit. If you need to make a big purchase, a money order may not cover the full amount.
When to Use a Money Order
You can use a money order when you want to give the recipient immediate access to funds, but prefer not to use a personal check or cash. While a money order will cost you a few bucks, you won't have to worry about cash getting lost or waiting for a personal check to clear your account.
When you fill out a money order, you'll sign it and select a recipient, which creates an official record and provides added security—for both you and the intended recipient. Money orders can be used to purchase goods and services, pay bills, or when you need to make an official payment, such as a payment to a government agency. Just keep in mind that money orders usually have a $1,000 limit, so you may need multiple money orders if your purchase exceeds the limit.
When to Use a Cashier's Check
Cashier's checks are often used when you need to make a large purchase with guaranteed funds. Typically they're used to pay for things like used vehicles from a dealer or private party, closing costs when buying a home, or when paying upfront costs like first, last and security deposit to a landlord. Just be sure to double-check how the recipient prefers payment, as sometimes you may be required to pay through wire transfer.
Cashier's checks tend to cost a bit more than a money order, but have no set limit on the amount you can purchase. Since cashier's checks are backed by bank funds, they're one of the most secure ways you can provide payment. They also tend to clear quickly once deposited by the recipient. Although you typically need to get a cashier's check at a bank or credit union, some banks may allow you to order a cashier's check online.
Which Is Safer: Money Order or Cashier's Check?
Both money orders and cashier's checks can help you make more secure payments. But cashier's checks are generally considered to be safer thanks to funds being backed by a bank or credit union. And since money orders are widely available, it's important to make sure you're purchasing a money order from a reputable vendor, such as the post office or a well-known retailer.
Both money orders and cashier's checks can be canceled for a fee, if they get lost or end up in the wrong hands. But money order scams tend to be more common. A popular money order scam involves someone sending the victim (you) a fake money order as payment for a purchase or taking payment by money order for a transaction and never sending you the item. In some cases, scammers may try to get you to send cash back. Before sending or receiving money by cashier's check or money order, learn more about protecting yourself from fraudsters.
The Bottom Line
Using a money order or cashier's check can help you securely transfer funds when you prefer not to pay by cash or check. But depending on what you're buying, there could be other options that are more convenient, like a wire transfer or ACH payment. For small purchases, paying with a peer-to-peer payment option, like Venmo and Zelle, may be a better choice.