We Break Down When to Use a Cashier’s Check or a Money Order

A cashier’s check or a money order can come in handy if you’re paying bills or making a large deposit on a purchase, such as closing on a mortgage. Because personal checks are not accepted at all businesses and financial institutions, either may be a good option if you don’t want to carry around a large amount of cash or you do not have a checking account.

Unlike a personal check that can bounce, both a cashier’s check and a money order offer a more guaranteed form of payment – although the two are not identical. Find out how they are different.

A cashier’s check is basically a check written by your bank, so the funding is verified. The money is taken out of your checking or savings account and made out to the recipient and signed by a bank teller or another representative of the bank. You can typically request a cashier’s check for any amount from a bank or credit union, but they are often used for larger amounts.

“Some issuers may cap transaction amounts, so it is a good idea to ask about the limit,” says Bruce McClary, senior vice president of membership and communications for the National Foundation for Credit Counseling and a former U.S. News contributor. “If you don’t have an account, it may be possible to obtain a cashier’s check in exchange for the cash equivalent plus a fee.”

Some banks charge a fee to customers to issue a cashier’s check. PNC Bank, for example, charges $10 per check. Others like Ally Bank offer cashier’s checks for free.

Similar to a cashier’s check, a money order is a widely accepted alternative to cash or a personal check. To receive a money order, you would pay the face value of the amount, plus a transaction fee, normally in cash. Money orders can be purchased at most convenience stores, supermarkets, post offices, banks and check cashing outlets, but amounts are limited to less than $1,000. If you are paying a bill in a larger amount, you could purchase more than one money order.

The money order doesn’t come with a recipient’s name – you write it in. Some retailers let you pay for a money order with a debit card.

Money orders and cashier’s checks work similarly, and both are alternatives to using regular checks. That said, there are some key differences to be aware of.

If you need to send money, you might be wondering if it’s best to use a cashier’s check or money order. Here are some common scenarios to consider when making your decision.

Cashier’s checks provide extra protection against losing the check because you can get a replacement from your bank. Plus, they provide the recipient a green light that funds will clear when presented, says Leslie H. Tayne, a New York-based attorney specializing in debt relief.

“The check is drawn on the bank’s own funds and signed by the bank’s teller, meaning the bank guarantees payment and not the individual as in a certified check,” she says. “This way, the receiver of the cashier’s check can be sure that the check will not bounce.”

In addition to security, a cashier’s check is typically used for large purchases such as a down payment for a car or a mortgage since the amount isn’t capped. In fact, a down payment for a house may require a cashier’s check to ensure funds will clear since the title is transferring at the time of payment, Tayne says.

“Since cashier’s checks are processed more quickly when presented due to higher reliability than personal checks, they prove that the money is available and that you are serious about the transaction,” she says. “It allows for trust between the parties.”

A money order is often used to pay a bill or a repair person and is useful if you do not have a checking account. A money order is a paper form of money and cannot bounce like a check, Tayne says.

“You don’t need a bank account to get a money order, and similar to a cashier’s check, the money is guaranteed,” she says.

The fees for money orders are usually lower than those for a cashier’s check and are popular for transactions such as providing a deposit for an apartment or other payments when checks and cash are not accepted or feasible.

“For smaller transactions, money orders can be a less costly alternative to cashier’s checks because the fees are typically lower and priced based on the amount,” Tayne says. “Money orders usually have a variable fee, with a capped maximum fee. Walmart, for example, charges a maximum fee of $1 for a money order.”

If you don’t have the ability to write checks, or want to send money in a more secure manner, a cashier’s check or money order could be the right tool. Though these two payment methods work similarly, there are some important differences – so consider factors such as how much money you need to send, how much you want to spend and the level of security you need.