Cashier’s Check vs. Money Order (All You Need to Know)

 

Ever found yourself in this situation?

You’re trying to make payment using a personal check, only to know that you need certified funds. You are not alone, as this happens more frequently. This is because some transactions need guaranteed funds, something personal checks lack.

Fortunately, there are cashier’s checks and money orders.  You can rely on them if you’re looking for a more secure payment method than personal checks.

But money orders and cashier’s checks are not the same. Here, you’ll see the differences between the two payment options, so you can decide on which one to use.

The Differences Between Cashier’s Checks and Money Orders

While cashier’s checks and money orders can both be used as guaranteed means of payment, they differ in terms of where to buy them, the cost, and where they can be used. While you can buy business and personal checks online, the case is different for cashier’s checks and money orders.  

Cashier’s Checks

Cashier’s checks are types of checks issued by banks. But you should not confuse them with certified checks or bank-issued checks.

When you buy a cashier’s check, the bank will take the money in your account and put it in their account. After that, the bank will write a check to the person or company you intend to pay.

You’ll be charged a fee for cashier’s check, with the largest banks charging an average of $10.

And since the bank uses the money from your account, your recipient will access the funds immediately. Although considered costlier than money orders, they are more trustworthy as a bank backs them.

Money Orders

A money order is a prepaid piece of paper that you are issued in exchange for cash. It is also a secure means of payment.

But unlike cashier’s checks, you don’t purchase it in a bank. Instead, you can find it at convenience stores, U.S. Postal Service, grocery stores, drug stores, and check cashing companies.

If someone sends you money through money order, you can cash in your money order at these places, or deposit it in your bank.

You can pay for a money order using a debit card, cash, or traveler’s checks but can’t write a personal check or use a credit card.

When you use a credit card, your provider will treat it as a cash advance. Just like the cashier’s check, you’ll be charged for a money order, but is less costly. The fee will depend on where you bought your money order from and the amount it is for. You may be charged as less as $1 or up to $5.

The benefit of using money orders over cashier’s check is that you can easily replace it when lost or stolen. When a cashier’s check is lost or stolen, you’ll need to request for a new one, and in some instances, you’ll have to purchase a bond from an insurance service provider. The bond protects the bank when you lose a cashier’s check again.

You’ll wait between 30 and 90 days after you’ve requested a new check.

Replacing a lost money order is very simple. You just need to return to the place you bought it and ask for a replacement. You might be charged a small fee, but you’ll get your replacement right away.

When to Use Money Order

Money orders can be a great choice if you want your recipient to receive money immediately and in a secure way.

And because a third party backs a money order, you can use it when you want to make an immediate and secure payment.

For instance, you can use a money order when paying for office supplies that need an immediate transfer. You’ll only need to fill out a money order, sign it, and choose a recipient.

Besides, people without bank accounts can use money orders to pay bills or make any official payments.

When to Use a Cashier’s Check

Cashier’s checks are an excellent choice when making large payments that need guaranteed funds. For instance, when buying a home or a car.

Cashier’s checks offer a great option to transfer large amounts of money as opposed to carrying cash. They are also used by bank account holders who want to pay bills with certified funds.

How to Protect Yourself from Fraud

One way to protect yourself from fraud when using money orders and cashier’s check is to ensure that you buy them from reputable vendors.

Be sure to fill your details on the money order to prevent fraudsters from using it for illegal purposes.

Also, keep your receipts for money orders and cashier’s checks as you may use them to contact the issuer in case you have any problems. 

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