Money orders and cashier’s checks are both ways to make a payment. They both look much like an everyday check. That might be way many people don’t really know what a money order versus a cashier’s check is.
What’s a Cashier’s Check?
A cashier’s check is a check issued and guaranteed by a bank. Instead of a personal check from your account. It’s a check from the bank’s checking account. Cashier’s checks are typically used for large purchases. Banks or credit union print the check with the name of the payee or recipient and the amount to be paid out. The recipient cashes the check to get the money, just like with a personal check. The benefits of a cashier’s check compared to a personal check are:
- A cashier’s check has no risk of bouncing.
- A cashier’s check includes guaranteed funds.
- Funds are immediately available when the check is cashed while large withdrawals from a personal count may take up to five days to be available.
What’s a Money Order?
A money order is a paper document used to make payments. You get a money order from a bank by paying the sum of the money order and specifying the recipient. The bank then makes the money order, which looks like a check. Because you’ve prepaid for the money order total, the funds are guaranteed. There no risk that it will bounce.
What Money Orders vs. Cashier’s Checks Have in Common
Money orders and cashier’s checks share some traits including those outlined here.
Both Are Similar to Checks
Recipients deposit both money orders and cashier’s checks into their accounts as they would a personal or business check. Alternatively, a recipient can cash a cashier’s check or money order at a bank or credit union who allows cashing these payment options.
Both Benefit Recipients
Both cashier’s checks and money orders offer the guarantee that the funds exist. Unless counterfeit, there’s no risk that either will bounce.
Both Offer Privacy
Neither money orders nor cashier’s checks require personal information from the payer or payee. Unlike a personal check, they do not include your address or phone number.
Both Are Hard to Stop Payment On
Stopping payment on a cashier’s check or money order is difficult. And it is all-but impossible once the check or money order has been cashed.
How Money Orders and Cashier’s Checks Are Different
Even though they look like checks, there are differences between money orders and cashier’s checks.
Both Have Different Maximums
The maximum amount for money orders is roughly $700 to $1,000. Actual amounts depend on the issuing bank or credit union. Cashier’s checks have higher limits, even up to hundreds of thousands of dollars.
Money orders can be purchased by simply walking into any store that sells them. These stores include convenience stores, pharmacies, post offices, grocery stores, banks and credit unions. Money orders can’t be purchased online.
Cashier’s checks are available only from banks and credit unions. You’re best to go to your own bank or credit union. But, if you don’t have an account at a local branch, you can get a cashier’s check:
- Online, by mail or fax from a bank or credit union where you have an account.
- From an online bank where you have an account.
- From a bank where you do not have an account, if you have cash for the amount and the bank is willing.
Some banks restrict who can order cashier’s checks online and where the checks can be sent.
Different Trust Levels
Cashier’s checks are more trusted than money orders. This is because banks issue and guarantee cashier’s checks. Money orders are seen as less trustworthy.
Both cashier’s checks and money orders include a cost. Money orders can be purchased for 70 cents to $5 above the value of the order depending on the issuer. Cashier’s checks can cost $10 on top of the check’s value. Some banks and credit unions will waive the fee for select customers however.
They are also issued by the banks which have a higher reputation compared to the low reputation of the mass sellers who often sell money orders for a dollar.
Availability of Funds
The first $5,000 of a cashier’s check is typically available within one business day. The remaining funds will take longer to become available. Money orders funds also take longer. Only the first $200 is available within a business day.
Money orders purchased from the United State Postal Service though, typically ensure funds are available with a single business day.
When to Use a Money Order vs a Cashier’s Check
As a general guideline, choose a money order for smaller amounts—less than $1,000—and if you don’t have a bank or credit union account. Choose a cashier’s check for purchases over $1,000, you want to security of guaranteed funds and can find a bank or credit union to work with you if you don’t have an account at one already.