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 aor 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 generally safer than a personal check because it doesn't list any of your personal account information. It's also safer for the recipient because cashier's checks can't bounce.
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?
Money orders are just as secure as a cashier's check and are widely available because they aren't tied to bank accounts. You can buy them with cash at many banks, grocery stores, convenience stores, gas stations and post offices. Much like a cashier's check, the funds are guaranteed since you're paying the issuer upfront. Domestic orders typically have fees ranging from $1 to $5, and international orders may cost upward of $10.
The recipient can then cash the money order just like a check. Depending on where the recipient cashes it, there might also be a fee for them. Some domestic money orders, like those issued by the US Postal Service, have a $1,000 limit ($700 for international money orders).
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 cost anywhere from $10 to $15, and money orders have fees that range from $1 to $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: With a money order, domestic orders have a limit of $1,000, while international orders have a limit of $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.