Cashier’s checks and money orders are both helpful in cases where credit cards, debit cards and personal checks aren’t ideal -- like if you’re buying a car or home, or sending money through the mail. Despite that commonality, they differ in where you buy them, what they cost and when you should use one over the other. They aren’t always interchangeable, so it’s essential to understand the difference to avoid choosing the less appropriate payment method.
What is a cashier’s check?
A cashier’s check is an official check issued by a bank or credit union on behalf of a bank customer. When you request a cashier’s check, the check is drawn from a bank’s funds and generally signed by a teller. You are responsible for paying the funds to the bank upfront.
You purchase a cashier’s check at your own bank or credit union. Despite being a customer, you’ll have to show ID. You’ll also need your payee’s information, which the bank will print on the cashier’s check.
Most credit unions and banks charge a fee for cashier’s checks. Depending on the financial institution, fees for cashier’s checks typically range from $5 to $15.
A cashier’s check is more secure than a personal check or a money order. It is guaranteed by a bank or credit union; includes the name of the issuing financial institution, the payee and the payer; and may be watermarked.
When should I use a cashier’s check?
Cashier’s checks don’t have funding ceilings, making them ideal for large payments. When you purchase a car or put a down payment on a home, you want to make sure the funds end up only in the right hands. A cashier’s check limits risk for the bank or third-party sellers, and you know your money will end up in the right hands. In fact, any large payments -- say, over $1,000 -- may be good candidates for a cashier’s check.
What is a money order?
Though not quite as secure as a cashier’s check, money orders are even more widely available, offered by banks, grocery stores, convenience stores and post offices. And you don’t need a bank account to buy one. You will need to prepay for it, however, using cash or a debit card; in some cases, you may be able to use a credit card, but the transaction will likely be subject to a cash advance fee and interest charge.
Large retailers, like Walmart, tend to offer lower prices for a money order than banks and credit unions. Typically, they cost between $1 and $5, though money orders purchased to be sent abroad may cost considerably more. It’s also worth noting that money orders usually have a maximum amount -- often $1,000.
When does it make sense to use a money order?
Money orders are good for sending money overseas because they are secure, unlike cash. They’re also ideal for anyone making payments domestically if you don’t have a bank account. Otherwise, they are great for any scenario where a small but secure payment is necessary.
What’s the difference between cashier’s checks and money orders?
Consider the differences between cashier’s checks and money orders before deciding which is right for you.
- Cost: Cashier’s checks usually cost between $5 and $15. A money order typically costs between $1 and $5.
- Availability: Cashier’s checks are available through your bank or credit union, while money orders are widely available at banks, convenience stores, post offices and gas stations.
- Security: For a cashier’s check, the bank prints the recipient’s address for you. But you’re responsible for filling out the payee’s information on a money order. If your money order gets stolen, for example, before you address it to the payee, you’re risking someone else writing in their information and stealing your money.
- Payment limits: Money orders for use in the US are limited to $1,000. Depending on the country where the recipient resides, international orders have various limits up to $700. Cashier’s checks typically don’t have payment limits, and you can make a large purchase as long as you have the money.
The bottom line
Both cashier’s checks and money orders are solid alternatives to cash and personal checks. Before you decide which payment method makes the most sense for your next transaction, keep in mind the funding limits, fees and availability. If you need to make a large payment because you are in the process of purchasing a home or car, a cashier’s check may be your best option. But a money order might make more sense if you don’t have a checking account and need to complete a midsize transaction.
Correction, 7:30 a.m. PT Jan. 25: An earlier version of this article stated that money orders are just as secure as a cashier’s check. The article has been corrected to clarify that money orders are not as secure as cashier’s checks, which are guaranteed by a bank or credit union; include the name of the issuing financial institution, the payee and the payer; and may be watermarked. The earlier version also incorrectly stated that international money orders are limited to $700. The article has been corrected to clarify that money orders for use internationally may have lower limits.
