If you need to make a payment for goods or services and you want to use a safe and reliable method, instead of traditional checks or cash you can use a money order or a cashier’s check. The two are similar in that they are both considered secure ways to pay, but they have some key differences that you should be aware of before deciding which one to use.
What is Money Order?
A money order is a prepaid financial document that is similar to a check. It can be used to pay for goods or services and is often used when a traditional check is not accepted. Money orders can be purchased from a variety of locations, including post offices, grocery stores, and banks. To purchase a money order, you must pay the full amount upfront, plus a small fee. Money orders are typically limited to a certain amount, usually around $1,000.
What is Cashier’s Check?
A cashier’s check is a check that is issued by a bank and drawn on the bank’s own funds. It is also known as a banker’s check or official check. Like a money order, a cashier’s check is a safe and reliable way to pay for goods or services, but it is typically used for larger transactions. To obtain a cashier’s check, you must have an account at the bank or credit union and have sufficient funds available to cover the amount of the check.
Differences Between Money Orders and Cashier’s Checks
There are several differences between money orders and cashier’s checks that you should be aware of:
- Cost: Money orders are generally cheaper than cashier’s checks. The fee for a money order is usually around $1 or $2, while the fee for a cashier’s check can be significantly higher, typically between $5 – $10.
- Safety: Both money orders and cashier’s checks are considered safe and reliable ways to make financial transactions, but cashier’s checks may be considered slightly safer because they are issued by a bank and drawn on the bank’s own funds.
- Ease of use: Money orders are generally easier to use than cashier’s checks. They can be purchased at a variety of locations, including post offices, grocery stores, and banks, and you do not need an account at a bank or credit union to purchase one. In contrast, cashier’s checks can only be obtained from a bank or credit union, and you must have an account there and sufficient funds available to cover the amount of the check.
- Acceptance: Both money orders and cashier’s checks are widely accepted, but there may be some situations where a cashier’s check is preferred. For example, some landlords or real estate agents may prefer a cashier’s check for rent or a down payment on a house.
When to Use a Money Order
Money orders are a good option when you need to make a payment and you do not have a checking account or a credit card, or if the recipient does not accept traditional checks. Money orders are also a good option for small transactions, as they are generally limited to around $1,000.
When to Use a Cashier’s Check
Cashier’s checks are a good option when you need to make a large payment and you want the added security of using a check issued by a bank. They are also a good option if the recipient prefers a cashier’s check or if you need to make a payment quickly and do not have time to wait for a traditional check to clear. However, keep in mind that cashier’s checks are generally more expensive than money orders and can only be obtained from a bank or credit union.
