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, generally costing up to $5 and not requiring a bank account, they typically have a $1,000 limit. Cashier’s checks tend to be more expensive, typically costing at least $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?
The major difference between a cashier’s check and a money order is cost and where you can purchase them. A money order costs less than a cashier’s check. You can buy money orders at banks and other places, but cashier’s checks must be obtained using an account at a financial institution, bank or credit union.
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 options. The funds are typically limited to $1,000. They’re much cheaper than cashier’s checks. For example, you can buy a money order at Walmart for a maximum fee of $1.
A cashier’s check is not unlike a money order but is issued by a bank and requires a bank account. 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. 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. There are no amount limits.
The following table provides a quick comparison between the two payment types so you can understand the other differences:
| Cashier’s Check | Money Order | |
|---|---|---|
| Cost | Typically $10 and up | Typically 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 | Typically up to $1,000 |
| Availability | Financial institutions | – Check-cashing locations – Certain banks – Convenience stores – Money transfer services – Gas stations – Grocery stores – Drugstores – Post offices – Retailers |
| 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 |
| Where Accepted | – Banks – Businesses – Individuals |
– Banks – Businesses – Individuals |
| What Else You Should Know | Recipient’s 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 |
When Should I Use a Cashier’s Check vs. a Money Order?
Cashiers’ 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 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, whereas using a cashier’s check is a handy option when you need to make a security deposit on an apartment.
Although both cashier’s checks and money orders are generally accepted, that doesn’t mean that all businesses and individuals will accept them. For best results, verify that your desired form of payment will be accepted before you attempt to use it.
Is a Cashier’s Check Safer Than a Money Order?
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 it.
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.
Protecting Yourself From Money Order and Cashier’s Check Fraud
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 send a wire payment to cover a fee, taxes or the cost of shipping. The problem is that 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 it 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.
Alternatives to Cashier’s Checks and Money Orders
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 or 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 recipient’s name is correct. If you choose to use Zelle or Venmo, keep in mind that once the money is sent, it’s received almost instantly and generally 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.