Cashier’s Check vs. Money Order–What’s the Difference?

When you want to make a payment, cash may not always be an option. There are multiple ways for you to make a payment, but money orders and cashier’s checks are among the most popular kinds.

While these two are two types of checks, there are still a few notable differences between them. Cashier’s check vs. money order – which one is the most convenient option for you? This article will help you come to a decision when making your payments.

Difference between a Cashier’ Check and a Money Order

Money orders and cashier’s checks are both types of checks you fill out to make a payment – so, in a way, you could say that they are quite similar. However, both of them have their differences.

Cashier’s Check

A cashier’s check is an official check that was issued by the bank. When you go for a cashier’s check, the amount of money will be pulled out from your account and then sent into the account of the bank. The bank will then write down a check for the person whom you intend to pay. Cashier checks are a safe option for the receiver, as they are not likely to bounce.

Money Order

Money orders are also a form of payment that is considered safe for the receiver – only instead of getting it from the official bank, you can get it from various other places. You may get them from the postal office, the grocery store, the drug store – even a gas station if they have that option. They are a better choice for smaller payments, and when compared to cashier’s checks, they are less expensive.

What’s the Difference?

The main difference between the two is that while one does not have a limit (cashier’s checks), the other cannot go any higher than $1,000. This means that a money order has some limitations, so you may not be able to buy a car with it, for example.

Another difference is the way you may cancel the check. A money order is much easier to replace as compared to a cashier’s check. To cancel a money order, all you have to do is go with the receipt to the place where you purchased it, and they will give you a replacement.

Cashier’s checks are not that simple to replace and may take 30-90 days to have them reissued. That’s because you need to make a request to the bank, as well as buy an indemnity bond. This bond will protect the bank in case you lose the check again, making the process all the more troublesome.

When to Use Which

Cashier’s checks are issued by official institutions. So, due to their safety details, they are a more convenient option if you have to make a large payment – like for a yacht, a car, or a home. In some cases, the cashier’s check may be the only solution, as they are the only ones capable of withstanding these types of large payments.

On the other hand, money orders are an appropriate solution for smaller payments – say, paying your rent or buying a certain service. For example, when you are paying your visa fees, the most common option is a money order.

Why Cashier’s Checks Are Better for Large Purchases

In most cases, cashier’s checks represent a better choice when you have a larger purchase to make. Let’s say that you want to buy a used $5,000 car, but the seller you are planning to get it from won’t go for a personal check. Carrying that high amount of cash with you might feel quite inconvenient. So, with that in mind, what other alternative can you use?

Cashier’s checks come in handy in this scenario, because they feel more official. Plus, considering the fact that most companies won’t give out money orders past $1,000, you might not be able to make such a large purchase with them.

Since cashier’s checks generally do not have a limit, they are a better choice for large-scale payments. Sure, you can use a money order to pay the $500 deposit for your apartment, but you generally can’t use one for anything past $1,000.

Why Money Orders Cost Less and Are Easier to Buy

Cashier’s checks are a great option for large purchases, but at the same time, they can cost quite a bit. To get a cashier’s check, you will have to pay around $10, regardless of the amount that you are planning to get.

Money orders, although with varying prices, are a far more affordable solution. For example, if you get your money order from Walmart, you can enjoy some of the lowest prices – around 88 cents per piece. A money order issued by the US Postal Service will cost $1.65 at most, depending on the amount that you are trying to put on the check.

Banks have the highest rates – around $5 per money order. Some of them will waive the payment if you have a premium account, but you’ll still have to pay for the “premium” part. Still, considering these fees, a money order is a more price-friendly solution.

Why Cashier’s Checks Are a Little Safer

For both money orders and cashier’s checks, the one who buys those types of checks will write down the beneficiary’s name. If you lose either of them after the names have been filled out, people won’t be able to cash it in if the names do not match. Plus, if you lose either of them, you can get a full refund based on the receipt that you receive from the issuing institution.

The risky part is WHEN the name isn’t filled in on either check. When you buy a money order, you buy it blank – and after that, you will have to fill out the contents yourself (find out how you fill out a money order here). The money order is practically paid for, and it already has your account data on it. All it’s waiting for is for you to write in the name of the beneficiary.

With that in mind, imagine what would happen if you lost the money order before you even had the chance to write the name of the beneficiary on it. Anyone who comes across it could be able to fill it in and cash it. And once that money gets cashed, you clearly will not be getting any of it back.

With cashier’s checks, things are slightly safer, because the financial institution will be the one to fill out the name of the beneficiary. Even if you lose it, unless the person finding it has the same name and personal data, they won’t be able to cash it in. Plus, since they are given out by financial institutions, they tend to be a lot more credible as compared to money orders from your local supermarket.

Wrap Up

In the end, both money orders and cashier’s checks represent a great option to make safe payments. You just need to choose based on the type of payment that you have to make. Cashier’s checks are more suited for large payments, whereas money orders are better for smaller ones.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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