Protecting checking accounts from fraud and financial loss is an ongoing battle waged by depositors. Between 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 a safer form of payment over debit cards and traditional checks.
The differences between a money order and cashier’s check — and when it’s most appropriate to use each — aren’t always so clear. To help you understand which payment option is best for which situation, check out the answers to a few of the most common questions 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
What Is a Cashier’s Check?
Cashier’s checks are checks supplied by financial institutions. So the answer for where to get a cashier’s check is limited: You can find them at banks, credit unions and other financial institutions. To get a cashier’s check, you must provide the payment — and your ID — upfront, and the bank guarantees the funds.
Cashier’s checks can cost as much as $10 and can be used to pay large amounts of money. Generally, there’s no limit on the amount of a cashier’s check because you are paying the full face value of the check. Understanding the pros and cons of cashier’s checks can help you decide if they’re right for you.
Some advantages of using a cashier’s check are:
- Unlimited face value: How much money you pay determines the value of your cashier’s check.
- Wide acceptance: Cashier’s checks are among safest forms of payment for a payee because the bank issuing the check, not the person using it to pay, is guaranteeing payment.
- Convenience: You don’t need to have a bank account to purchase a cashier’s check.
Some disadvantages of using a cashier’s check are:
- Cost: Although your fee might be waived if you’re a customer of the financial institution, the cost of a cashier’s check is usually around $10.
- Fraud: Scams and fraud involving cashier’s checks are popular because this form of payment is usually assumed to be very safe.
How to Get a Cashier’s Check
To obtain a cashier’s check, you’ll need to visit the bank and follow a few steps. So that the bank can create and issue the check, take the following actions:
- Show some form of ID such as a passport or driver’s license.
- Identify the name of the person or business you’ll be paying.
- Specify the amount of the cashier’s check.
- Provide your account information and transfer the funds from your account to the bank issuing the cashier’s check. Alternatively, you might bring cash to give to the bank for the amount of the cashier’s check.
- Pay the service fee.
What Is a Money Order?
A money order is a form of payment that works like a check. The answer for how to get a money order is straightforward: To buy one, you supply the full payment upfront to the money-order seller, rather than having the amount withdrawn from your bank account when the recipient cashes the money order.
If you’re researching where you can get a money order near you, you’ll find that you can buy a domestic or international money order at a variety of establishments like post offices, convenience stores, retailers and gas stations. Money orders are usually capped at around $1,000, and ID is required for the purchase.
How much a money order costs varies: The price can range from a few cents to $5. Be aware that if you buy a money order with a credit card, you might be charged a cash-advance fee by your credit card company.
Knowing the pros and cons of money orders can help you determine how useful they could be to you. Some advantages of using a money order are:
- Safety: Money orders are generally accepted as safe forms of payment. Because money orders can only be bought with cash, there’s no risk of them bouncing like checks written from accounts with insufficient funds.
- Cost: A money order is inexpensive; one can cost less than a dollar depending on the amount of the money order and where you buy it.
- Convenience: Money orders are widely available at convenience stores, post offices, retailers and other locations.
Some disadvantages of using a money order are:
- Limited acceptance: Money orders are sometimes not accepted in place of a cashier’s check because they’re regarded as a less-secure form of payment.
- Limited face value: The cap on money orders is typically $1,000.
How to Fill Out a Money Order
After you have purchased a money order, you’ll need to fill out the money order form with some information:
- Fill in the “Pay to the Order of” line with the name of the person or business you wish to pay.
- Fill in your name in the appropriate section, which will be labeled as one of the following: “From,” “Purchaser,” “Sender” or “Remitter.”
- Sign the front of the money order in the appropriate section, which will be labeled “Purchaser, Signer for Drawer.”
- If there are fields labeled “Address” or “Phone Number,” you might be required to fill them out.
- In the “Memo” field, you have the option to indicate what the payment is for.
- Leave the back of the money order blank so that the recipient can endorse it with his signature.
As for how and where to cash a money order, the answers are simple: You can generally cash a money order at the same places where you would purchase them. A retail, grocery or convenience store, a dedicated check-cashing store, and even your bank are among the places where you can turn in the money order to get cash.
You’ll need to provide ID, and you might need to pay a fee for the service. After supplying those items plus the money order, you’ll be given cash in the amount specified on the money order.
A post-office money order is the only kind you can get cashed at a post office location; the U.S. Postal Service will not cash money orders issued by other retailers. If you need to send a money order to someone, you might consider buying it at the post office because you can also mail it out to your recipient from there. Otherwise, you might need to send the money order to another location owned by the seller you’re buying it from — for example, Western Union or MoneyGram — and your recipient can pick it up from that company’s nearest location.
If a money order is lost or stolen, you might be able to get it replaced for a fee. You must report the stolen or lost money order to the seller, who will take you through the process of getting it refunded or replaced.
When Should I Use a Cashier’s Check vs. a Money Order?
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 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 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.
Alternatives to Cashier’s Checks and Money Orders
If neither a cashier’s check nor a money order is the right solution for your needs, you might consider other methods of payment.
Alternative methods of payment include:
- Certified checks: The bank issuing the certified check guarantees that there’s enough cash in the check writer’s account to cover the amount to be transferred when the check is used. The bank also guarantees the account holder’s signature on the check. Certified checks are sometimes preferred if the recipient does not fully trust the person and wants to avoid bounced checks.
- Traveler’s checks: Traveler’s checks are usually used by people traveling to different countries as a substitute for hard currency. A bank or other financial institution guarantees the safety of this form of payment. If a traveler’s check is lost or stolen, it can be canceled, and a new check can be issued.
- Wire transfers: Money can be electronically transferred via a wire transfer, which is usually used to transfer money across long distances.
These payment alternatives might be better than money orders and cashier’s checks under specific circumstances. If a personal check or cash is not an option for you, cashier’s checks and money orders are typically sufficient forms of payment for a range of common situations.
Casey Bond contributed to the reporting for this article.