November 13, 2023

Cashier's Checks vs. Money Orders: 7 Key Differences

When it comes to finances, security is paramount. We all want the comfort of knowing our funds are safe, especially when making substantial payments, like rent or a bill that requires guaranteed funds. But in an era where the vulnerabilities of personal checks and cash are increasingly evident, or if you find yourself without a standard checking account, where can you turn? Enter: cashier’s checks and money orders.

These methods have earned the respect and trust of countless people for their inherent security and credibility. But there are differences between cashier’s checks and money orders. To harness their true power, let’s talk about the specific scenarios where each is most appropriate.

Here’s all you need to know about what cashier’s checks are, what money orders are (including whether money orders are also checks), and when to use either one.

What is a cashier's check?

A cashier's check is a payment instrument issued by a bank or credit union.

Unlike personal checks, which are drawn against your own account, a cashier's check is drawn against the bank's funds. This means the bank guarantees the payment, making it a secure form of payment for both the payer and the recipient.

Cashier's checks are typically used for more significant, high-dollar transactions where more security and assurance is required. This might include deposits on apartments or even down payments on houses. The bank's guarantee makes a cashier's check a great option in such scenarios.

How to get a cashier’s check

To obtain a cashier's check, you usually need to visit a bank or credit union branch in person. You provide the bank with the amount of money you want the cashier's check to be issued, plus any applicable fees. The bank then deducts that amount from your account and issues the cashier's check with the recipient's name as the payee.

While many institutions require you to have an account in the same bank to get a cashier’s check, some accept cash in the amount of the cashier’s check. The best way to seek information about which payment method a bank accepts is by simply asking the bank teller or clerk about their policy.

What is a money order?

Money orders are prepaid payment instruments that are a secure alternative to cash or personal checks. They’re often used when the recipient requires a guaranteed form of payment rather than a personal check or when the payer (or customer) doesn't have a checking account. As such, money orders are widely accepted by businesses, government agencies, and individual sellers, making them a convenient option.

Money orders are particularly useful for maintaining transaction records and/or dealing with parties that won’t accept personal checks. People typically use money orders to pay bills, send money to family or friends, make purchases from individuals, or conduct business transactions by mail. The recipient can cash or deposit the money order just like a check.

How to get a money order

To obtain a money order, visit a bank or credit union. You can also head to certain post offices, convenience stores, and other retail providers. Just specify the amount you want the money order to be for and pay the total amount in cash or some other acceptable form of payment (like a debit or credit card). The provider will then issue the money order and provide you with a receipt.

Cashier’s checks vs. money orders: What’s the difference?

While both cashier’s checks and money orders function as more secure alternatives to traditional personal checks or cash, key differences between these two payment tools can influence when and how one might opt to use them. Here are seven core distinctions:

1. Issuer and purchase locations

Cashier's checks are issued by banks or credit unions (and may require you to have an account with the particular institution), while money orders can be issued by a broader range of businesses, including post offices and stores like Walmart and 7-Eleven.

2. Maximum amount

Cashier's checks often have higher maximum amounts than money orders. Some banks may issue cashier's checks with limits ranging from a few thousand dollars to tens of thousands, making them suitable for larger, more substantial transactions. Money orders, however, have lower maximum amounts, usually around $1,000–$2,000, making them more appropriate for smaller transactions.

3. Recipient

Cashier's checks are often made payable to a specific recipient or payee, while money orders are usually left blank until filled out by the purchaser, facilitating greater flexibility in terms of naming the recipient.

4. Cost

Both cashier's checks and money orders involve fees, but their costs vary. Cashier's checks typically have higher fees (especially if you're not a customer of the issuing bank). Money order fees are generally lower, making them more accessible.

5. Acceptance

Cashier's checks are generally accepted in a wider range of transactions, including rental and real estate transactions. Money orders are commonly used for smaller payments, bills, and personal transactions.

6. Availability

Cashier's checks are often available only during regular banking hours, whereas money orders can be purchased from stores with extended hours, like convenience stores that stay open late.

7. Security

When it comes to knowing which is more secure, a money order or a cashier’s check, both have built-in safeguards to prevent fraud. Cashier's checks may be slightly more secure, however, because they’re issued by banks and drawn on the bank's funds.

When to use a cashier's check vs. money order

Although both cashier’s checks and money orders provide a secure means of payment, their best application depends on the specific circumstances of a transaction. For example, if you want to make a large purchase or send money to a private party, or you need funds immediately, you can choose a cashier’s check. However, if you want to make small transactions, don’t have a bank account, or want to send money to someone internationally, money orders are a great option.

Access your money faster with EarnIn

As you navigate the complicated world of financial transactions and explore options like cashier's checks and money orders, having financial solutions that offer you flexibility and support is key. That’s why EarnIn makes financial tools that adapt to your needs on our innovative, easy-to-use app.

EarnIn's Cash Out tool, in particular, helps you access your wages as you work — instead of days or weeks later on payday. Think of it as a financial safety net, giving you the flexibility to handle unforeseen emergencies and unexpected expenses, as well as a tool to manage everyday expenses better. Whether you have medical bills, an upcoming move, or a fun, special occasion to plan for, having access to your pay as you earn it helps minimize the stress associated with such situations.

And EarnIn's commitment to financial empowerment extends beyond earned wage access. With EarnIn, you’ll find a growing wealth of tools and resources to help you manage your financial life and reach your goals.

Download EarnIn and make it a part of your everyday financial toolkit today.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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