Protecting checking accounts from fraud and financial loss is an ongoing battle waged by depositors. With credit card skimmers, check-cashing scams and a number of other dangers threatening people’s checking account security, many people turn to cashier’s checks and money orders as safer forms of payment over debit cards and traditional checks.
The difference between a money order and cashier’s check — and when it’s most appropriate to use each type — isn’t always so clear. To help you understand which payment option is best for which situation, check out key information about cashier’s checks versus money orders.
What’s the Difference Between a Cashier’s Check and a Money Order?
The biggest difference between money orders versus cashier’s checks is how they’re obtained and how much money they can be used to process. Although you can find a place that sells money orders almost anywhere, you must go to a bank, credit union or other financial institution to obtain a cashier’s check. For this reason, cashier’s checks are considered to be more credible forms of payment.
The following table provides a quick comparison between the two payment types so you can understand the other differences:
|Cashier’s Check vs. Money Order|
|Cashier’s Check||Money Order|
|Cost||Up to $10||Up to $5|
|Requirements to Purchase||ID||ID|
|Limit of Check Amount||No limit||$1,000|
|Where to Get||Financial institutions||Check-cashing locations|
|When to Use||For payments over $1,000|
Situations requiring more security
|If you don’t have a checking account|
For mailed payments
To prevent bounced checks
To avoid using personal checks
To send money overseas
When Should I Use a Money Order vs. Cashier’s Check?
Cashier’s checks and money orders might seem interchangeable, but depending on the situation, one form of payment is more useful than the other.
It’s best to use a money order when:
- You need to mail a payment and want to avoid sending a check or cash.
- You keep a tight budget and want to prevent bouncing a check.
- You’re exchanging money with someone you don’t know well and would rather not provide them with a personal check.
On the other hand, a cashier’s check is a better option when:
- The total payment amount exceeds the cap for a money order.
- You prefer the heightened security of a cashier’s check versus a money order.
For example, it could be a good idea to send a money order to pay for something you’re purchasing by mail from a stranger; using a cashier’s check is a handy option when you need to make a down payment on an apartment.
Both money orders and cashier’s checks can be forged, so it’s important to treat them with the same scrutiny as you would any other form of payment. Additionally, although both cashier’s checks and money orders are generally accepted, not all businesses and individuals accept them, so you should verify that your desired form of payment will be accepted before you attempt to use it.