What is the main difference between a bank draft and a money order?

A bank draft is issued and guaranteed by a bank, while a money order is a prepaid instrument usually purchased at retail locations or the post office.

Is a bank draft safer than a money order?

Both are considered secure because funds are verified before issuance. However, both can be targets for fraud if counterfeit.

Can I get a money order for more than $1,000?

Most money orders are capped at $1,000 per order, including those issued by the U.S. Postal Service.

Which costs more: bank draft or money order?

Bank drafts typically cost more, often between $5 and $15, while money orders usually cost a few dollars.

Do I need a bank account for a bank draft?

Yes. A bank draft is typically issued to account holders because the funds are drawn directly from your account.

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Bank Draft vs Money Order: What’s the Difference?

February 19, 2026

5 min Read

Written by GOBankingRates Staff

Edited by Joe Evans

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If you need a secure way to pay someone — especially for a large purchase — you might be weighing a bank draft vs money order. Both are safer than personal checks. Both guarantee funds. But they’re not the same thing.

The right choice depends on how much you’re paying, where you’re buying it and how quickly you need it.

Let’s break it down clearly.

At a Glance: Bank Draft vs Money Order

Feature Bank Draft Money Order
Issued By Bank or credit union Retailer, post office or financial provider
Typical Limit Often $1,000+ (no low cap) Usually capped at $1,000
Cost $5 to $15 on average $1 to $5 typically
Best For Large transactions Smaller secure payments
Funding Source Bank account Cash or debit card

Feature	Bank Draft	Money Order
Issued By	Bank or credit union	Retailer, post office or financial provider
Typical Limit	Often $1,000+ (no low cap)	Usually capped at $1,000
Cost	$5 to $15 on average	$1 to $5 typically
Best For	Large transactions	Smaller secure payments
Funding Source	Bank account	Cash or debit card

What Is a Bank Draft?

A bank draft (sometimes called a cashier’s check) is a payment guaranteed by a bank. When you request one:

The bank withdraws money from your account.
The bank issues a check backed by its own funds.
The recipient gets guaranteed payment.

Because the bank guarantees the funds, sellers often prefer bank drafts for:

Real estate closings
Vehicle purchases
Large deposits

According to the Federal Trade Commission, cashier’s checks and similar bank-issued instruments are considered more secure than personal checks because they’re backed by the issuing institution.

What Is a Money Order?

A money order is a prepaid payment instrument. You buy it upfront using:

Cash
Debit card
Sometimes credit card

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Money orders are commonly purchased from:

United States Postal Service
Grocery stores
Convenience stores
Check-cashing centers

Unlike bank drafts, money orders usually have a maximum limit of $1,000 per order (USPS limit) (USPS). They’re commonly used for:

Rent payments
Utility bills
Small transactions
Sending money by mail

Key Differences Between Bank Draft and Money Order

1. Purchase Location

Bank drafts are obtained from banks or credit unions.
Money orders can be purchased at retail locations or the post office.

2. Payment Limits

Money orders often have strict limits — USPS caps domestic money orders at $1,000 per order (USPS). Bank drafts typically don’t have that low ceiling, making them better for larger transactions.

3. Fees

Money orders: usually $1 to $5
Bank drafts: often $5 to $15

Some banks waive cashier’s check fees for premium account holders.

4. Funding Method

Bank draft: drawn directly from your bank account
Money order: prepaid at time of purchase

Which Is Safer?

Both are safer than personal checks because funds are verified before issuance. However, the Federal Trade Commission warns that scammers frequently use fake cashier’s checks and money orders in fraud schemes. Always verify authenticity before accepting one.

Security tips:

Confirm with issuing bank if unsure
Avoid overpayment scams
Never refund excess funds before verification

When To Use a Bank Draft

A bank draft makes sense when:

The amount exceeds $1,000
A seller requires guaranteed bank-backed funds
You’re making a high-value purchase
A contract specifically requests a cashier’s check

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Examples:

Buying a used car from a private seller
Paying a home closing deposit

When To Use a Money Order

A money order is usually better when:

The amount is under $1,000
You don’t have a bank account
You need to mail payment securely
You want lower fees

Money orders are especially useful for renters who need a paper trail without using a personal check.

Can Either Be Cancelled?

Yes, but it’s not instant. For both:

You must provide proof of purchase
You may pay a cancellation fee
There may be a waiting period

The USPS allows money order replacements if lost or stolen, but it can take time to process (USPS). Bank drafts may require an indemnity bond or a formal declaration of loss.

Bank Draft vs Money Order: Quick Comparison

If you’re still deciding:

Under $1,000 = Money order usually makes more sense.
Over $1,000 = Bank draft is often required.
No bank account = Money order is more accessible.
Real estate or legal transaction = Bank draft preferred.

Final Thoughts to GO

When comparing bank draft vs. money order, the biggest differences come down to limits, cost and where you purchase them.

Money orders are inexpensive and convenient for smaller payments. Bank drafts are stronger for large transactions that require guaranteed bank backing.

If you’re unsure which one a seller will accept, ask first. That small step can save you time — and fees.

FAQ

Although bank drafts and money orders are both secure payment options, many people still have questions about when to use each. Here are answers to common questions about bank draft vs money order.

What is the main difference between a bank draft and a money order?
- A bank draft is issued and guaranteed by a bank, while a money order is a prepaid instrument usually purchased at retail locations or the post office.
Is a bank draft safer than a money order?
- Both are considered secure because funds are verified before issuance. However, both can be targets for fraud if counterfeit.
Can I get a money order for more than $1,000?
- Most money orders are capped at $1,000 per order, including those issued by the U.S. Postal Service.
Which costs more: bank draft or money order?
- Bank drafts typically cost more, often between $5 and $15, while money orders usually cost a few dollars.
Do I need a bank account for a bank draft?
- Yes. A bank draft is typically issued to account holders because the funds are drawn directly from your account.

Top Checking Accounts for {{current_month-name}}

Data is accurate as of Feb. 19, 2026, and is subject to change.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.