Introduction to Money Orders and Cashier’s Checks
When you need to make a secure payment but don’t want to use cash or personal checks, money orders and cashier’s checks are two reliable options. Both are considered “guaranteed” forms of payment, but they work differently and are best suited for different situations.
What Is a Money Order?
A money order is a prepaid payment method that works like a check, but the money is guaranteed because you pay for it upfront. Think of it as a secure alternative to cash that you can mail or hand to someone.
How Money Orders Work
When you buy a money order, you pay the full amount plus a small fee. The money order is then issued for that exact amount, and the funds are immediately taken from your account or cash payment. The recipient can cash or deposit the money order just like a regular check.
Where to Get Money Orders
You can purchase money orders at many convenient locations:
- Post offices
- Banks and credit unions
- Grocery stores
- Pharmacies like CVS and Walgreens
- Convenience stores
- Money transfer services like Western Union
Cost of Money Orders
Money orders are generally inexpensive, typically costing between $1 to $5 depending on where you buy them. Post office money orders usually cost around $1.45 for amounts up to $500.
Money Order Limits
Most money orders have a maximum limit of $1,000, though this can vary by issuer. If you need to send more than $1,000, you’ll need to purchase multiple money orders.
What Is a Cashier’s Check?
A cashier’s check is a check issued and guaranteed by a bank or credit union. Unlike a personal check that draws from your account, a cashier’s check is backed by the bank’s own funds, making it much more secure.
How Cashier’s Checks Work
When you request a cashier’s check, the bank immediately withdraws the money from your account and sets it aside. The bank then issues the check using its own funds, essentially guaranteeing the payment. This is why cashier’s checks are considered as good as cash.
Where to Get Cashier’s Checks
Cashier’s checks are only available from banks and credit unions. You typically need to:
- Have an account with the institution
- Visit a branch in person (though some banks offer online ordering)
- Provide valid identification
Cost of Cashier’s Checks
Cashier’s checks are more expensive than money orders, usually costing between $5 to $15. Some banks waive this fee for premium account holders.
Cashier’s Check Limits
Cashier’s checks can be issued for much larger amounts than money orders, often with no upper limit or very high limits (sometimes $100,000 or more).
Key Differences Between Money Orders and Cashier’s Checks
| Feature | Money Orders | Cashier’s Checks |
|---|---|---|
| Cost | $1 – $5 | $5 – $15 |
| Maximum Amount | Usually $1,000 | Very high or no limit |
| Where to Get | Many retail locations | Banks and credit unions only |
| Account Required | No | Usually yes |
| Convenience | High – available at many locations | Lower – bank visits required |
| Security Level | High | Very high |
Security and Trust
Money Orders: Secure and widely accepted, but some businesses may be more cautious about accepting them for large amounts.
Cashier’s Checks: Generally considered more secure and trustworthy because they’re backed directly by the issuing bank.
Convenience and Availability
Money Orders: More convenient to obtain since they’re available at many retail locations with extended hours.
Cashier’s Checks: Less convenient since you must visit a bank during business hours and usually need an account there.
When to Use Each Option
Use a Money Order When:
- Paying bills by mail
- Making small to medium-sized payments (under $1,000)
- You need a secure payment method quickly
- You don’t have a bank account
- You want to keep costs low
- Paying rent or utilities
Use a Cashier’s Check When:
- Making large purchases (cars, down payments on homes)
- The recipient specifically requests a cashier’s check
- You’re involved in a real estate transaction
- Maximum security and trust are required
- You’re making a business transaction
Tips for Safe Use
For Both Money Orders and Cashier’s Checks:
- Fill out the recipient information immediately to prevent theft
- Keep your receipt until the payment is confirmed
- Never make them payable to “cash”
- Use them promptly after purchase
- Treat them like cash – if lost or stolen, replacement can be difficult and expensive
Red Flags to Avoid:
- Anyone asking you to purchase these and send them to unknown parties
- Overpayment scams where someone sends you a money order or cashier’s check for more than owed
- Requests to wire back “excess” money from these payment methods
The Bottom Line
Both money orders and cashier’s checks serve as secure alternatives to cash and personal checks, but they’re designed for different needs. Money orders are perfect for everyday transactions and smaller amounts, while cashier’s checks are better for large, important transactions where maximum security is needed.
Choose money orders for convenience and lower costs, and choose cashier’s checks when you need the highest level of trust and are dealing with significant amounts of money. Understanding these differences will help you make the right choice for your specific payment needs.