Credit card skimmers, check-cashing scams and several other dangers threaten people’s checking accounts. Many individuals and businesses turn to cashier’s checks and money orders as safer forms of payment. The major difference between a cashier’s check and a money order is found in the limits, availability and costs of each form of payment. While money orders tend to be cheaper and more accessible, typically costing less than $5 and not requiring a bank account, they have a $1000 dollar limit. Cashier’s Checks tend to be more expensive costing upwards of $10 and requiring a bank account, but do not have limits on dollar amounts. Read on to understand which payment option is best for you.
- What Is the Difference Between a Cashier’s Check and a Money Order?
- When Should I Use a Cashier’s Check vs. Money Order?
- Is a Cashier’s Check Safer Than a Money Order?
- Protecting Yourself From Money Order and Cashier’s Check Fraud
- Other Tools and Alternatives To Improve Your Financial Health
Cashier’s checks and money orders are a form of guaranteed payment because the funds are prepaid. That’s why many companies ask for a money order or cashier’s check as payment — to assure the funds are available at the time of cashing. This is unlike bank checks that are drawn from a checking account where the receiver has no guarantee the funds are available in the bank at the time of cashing. There is a risk that the check they’ve received may bounce.
Two of the major differences between a cashier’s check and money orders are cost and availability. Money orders cost less than cashier’s checks. You can buy money orders at banks and other places, but cashier’s checks must be obtained at a financial institution, bank or credit union. For this reason, cashier’s checks are considered the more credible form of payment of the two because they are issued by a financial institution, versus a money order issued at a grocery store or check-cashing business.
A money order is basically a prepaid check, meaning the funds are guaranteed. You can purchase a money order at post offices, banks, retailers, grocery stores and check-cashing outlets or Moneygram locations, to name a few. The funds are limited to $1,000. They’re much cheaper than cashier’s checks. For example, you can buy a money order at Walmart for 88 cents.
A cashier’s check is not to be confused with a certified bank check. Both are issued by a bank or financial institution. A cashier’s check is signed by the bank while the certified bank check is signed by the consumer. Similar to a money order, you prepay the funds to guarantee the cashier’s check. The bank stands behind the official check, which carries more clout than a store-bought money order. There are no amount limits.
Cashier’s checks are more expensive than money orders (up to $10 for one), although some banks and credit unions waive the fee for customers with certain types of accounts.
The following table provides a quick comparison between the two payment types so you can understand the other differences:
|Differences Between Cashier’s Checks and Money Orders|
|Cashier’s Check||Money Order|
|Cost||Up to $10||Up to $5|
|Requirements To Purchase||Bank account at a financial institution to order the check||No bank account required if purchasing through a retailer|
|Limit of Check Amount||No limit||Up to $1,000|
|Where To Get||Financial institutions|
|When To Use|
|What Else You Should Know||Receiver name filled out by the bank so cashier’s check is cashed only by that person||“Pay to” line blank — must be filled in or anyone can cash it|
Find Out: What Is the PNC Cashier’s Check Fee?
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 use a personal check.
On the other hand, a cashier’s check is a better option when:
- The large purchase amount exceeds the cap for a money order.
- You prefer the heightened security of a cashier’s check versus 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, whereas using a cashier’s check is a handy option when you need to make a down payment on an apartment.
Although both cashier’s checks and money orders are generally accepted, that doesn’t mean that all businesses and individuals will do so. For best results, verify that your desired form of payment will be accepted before you attempt to use it.
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A cashier’s check is safer than a money order because it’s backed by the financial institution that issued it. A cashier’s check is filled out by the bank, so the funds can’t be cashed by anyone other than who it was issued to. Money orders, on the other hand, carry extra risk. The “pay to” line is blank. Forget to fill it out, and anyone can cash the check.
When ordering a cashier’s check versus a money order, save the payment stub or receipt. You’ll need it to request a replacement or a refund if the check is lost or damaged.
Read: What Is Moneygram?
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. Some common money order and check scams to watch out for include:
- Foreign lottery scams: You’re contacted with a message that you’ve won the lottery and will receive a check for the amount — as long as you wire the costs from the check received. The problem is, the money order or cashier’s check is fake, and you’ll be out the money you wired.
- Overpayment scams: Someone asks you to deposit a check into your bank account and wire the difference. The check turns out to be counterfeit, and you’re out the amount of the check and the money you wired.
- Work-at-home scams: You receive payment via money order or cashier’s check. You’re asked to deposit the payments to your account and forward the money to somebody else. You’re inadvertently laundering money. The first few payments may clear, but once the bank realizes what’s happening, you’ll eventually be on the hook for the stolen funds.
Don’t accept checks from strangers. If you receive a cashier’s check or money order, check the document carefully. Among the things to look for to detect signs of fraud or forgery are flimsy paper, lack of official stamps or seals and typos or misspelled words. When in doubt, contact the financial institution or business that issued the check to verify if it’s legitimate before depositing it.
Dive in: How Much Is a Walgreens Money Order?
Although cashier’s checks and money orders serve a purpose, they’re not always convenient when you need to make a payment in a hurry. Here are some alternative payment methods worth considering:
- Open a Checking Account: A checking account comes with a debit card, checks, electronic transfers and autopay/bill pay options for convenience. A bank offers protections if your account has been compromised. As long as you report the fraud promptly, you won’t lose money.
- Mobile Wallets/Apps: Apps like Venmo, Zelle and Paypal are safe payment alternatives. When you send money, the app hides personal and financial data from the receiver by using encryption. Make sure the receiver’s name is correct. Once the money is sent, it’s received almost instantly and can’t be refunded if you made an error.
- Credit Cards: Paying with your card may be one of the safest methods. Although your credit card number could be stolen, you’re not responsible for unauthorized charges, as long as you report them promptly.
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