Cashier’s Check vs. Money Order: What’s the Difference?
When you need to make a secure payment and want to avoid using cash, two common alternatives come to mind: cashier’s checks and money orders. While they may seem similar at first glance, there are key differences between them in terms of cost, security and usage. Whether you’re making a large purchase or simply trying to avoid personal checks, understanding how these personal finance tools differ can help you choose the right payment option for your situation.
What’s the difference between a cashier’s check and a money order?
Both cashier’s checks and money orders are prepaid forms of payment, meaning the funds are guaranteed. However, they differ in where they’re issued, their limits and how they’re paid for. Here’s a quick side-by-side comparison:
| Cashier’s Check | Money Order | |
| Availability | Available at banks and credit unions | Available at banks, post offices and some retail grocery stores (like Walmart) |
| Security | More secure; money comes from the check issuer’s funds | Less secure; money comes from purchaser’s funds |
| Payment Limit | Generally no maximum amount | Typically capped at $1,000 |
| Payment Method | Paid for with cash or funds from payer’s checking account | Paid for with cash, debit card or traveler’s checks |
| Costs | Higher fees (often $10 – $15) | Lower fees (usually under $5) |
| Use | Ideal for large or high-risk payments | Best for smaller, everyday transactions |
How a Cashier’s Check Works
When you’re making a payment for a large amount that needs to be secure and traceable — such as a down payment on a home, buying a car, or paying a security deposit, the recipient of the money may request the funds in the form of a cashier’s check. This is one way the buyer can be reassured that the funds won’t bounce — they’re essentially guaranteed by the institution that issues the check.
To get a cashier’s check, you go to a bank or a credit union in person and use your own funds to pay for it upfront. You will tell the bank the recipient’s name and dollar amount and they will make out the check for you. When the payee deposits the check, the funds are drawn from the issuing bank or credit union.
Pros and Cons of a Cashier’s Check
Cashier’s checks are known for their trustworthiness and are often required for high-value transactions. But like any financial tool, they have their pros and cons.
Pros
Guaranteed funds: Since the bank draws the check from its own account after receiving your funds, the payment is virtually guaranteed.
Higher limits: There’s no set cap on the amount you can write a cashier’s check for.
Widely accepted: Many institutions and sellers prefer cashier’s checks over money orders for large transactions, due to their enhanced security and reliability.
Cons
Higher fees: You’ll usually pay between $10 – $15 for a cashier’s check.
Less accessible: You must go to a financial institution to get one, and some institutions only issue them to account holders. You must also know the payee’s exact name before it can be issued because it cannot be left blank.
Replacement challenges: It usually requires a longer waiting period before a bank can place a stop payment a cashier’s check, or issue a replacement.
Susceptible to fraud: Though secure, fake cashier’s checks are a common tool in scams — especially in online transactions.
How a Money Order Works
Money orders are ideal for sending small amounts of money securely, especially if you don’t have a bank account. You can use them for things like paying rent, covering utility bills or mailing funds to someone who doesn’t accept electronic payments.
To make a money order transaction, you’ll go to a location that offers money orders. This could be a bank, credit union, post office, retail store or check-cashing store. The issuer will provide a blank money order form. You’ll need to fill it out with: the payee’s name, your purchaser information, a memo or account number and typically your signature. Then you pay for the money order with cash or a debit card. A credit card may sometimes be accepted, but it can come with a high fee. What you pay for the money order includes the amount you are sending plus the money order fee.
Pros and Cons of a Money Order
Money orders are easy to get and a convenient way to send smaller sums of money. They’re often used when you don’t have a checking account and want to avoid using cash, but you would also like a record of the transaction so you have a paper trail.
Pros
Low cost: Most money orders cost less than $5, making them budget-friendly.
Widely available: You can get them at convenience stores, post offices, banks and even supermarkets.
No bank account required: You can pay with cash or a debit card, making money orders a solid choice for the unbanked.
Cons
Low limit: Most money orders have a maximum value of $1,000, which isn’t useful for larger transactions.
Less secure: Since they’re not backed by a bank’s funds, they’re less trusted in high-stakes deals.
Replacement challenges: If lost or stolen, replacing a money order can be a time-consuming and costly process.
Final Thoughts
Whether you choose a cashier’s check or a money order depends on your specific needs. If you need to send a large, secure payment and are willing to pay more, a cashier’s check is likely the best option. For smaller transactions, or if you don’t have a checking account, a money order is a convenient and accessible choice. Understanding the differences can help ensure your payment is both safe and appropriate for the situation.
DISCLAIMER: This content is for informational purposes only and should not be considered financial, investment, tax or legal advice.
