Last updated on March 31st, 2021

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Should You Use a Cashier’s Check or Money Order?

CASHIERS CHECK MONEY ORDER

It can be frustrating when your check bounces and credit card payments get declined while undertaking a transaction. It would be best to note that this happens all the time.

Many transactions that involve a large sum of money inhibit the use of cash. Secured payment happens to be the best option to reduce the risk of carrying large amounts of money.

Besides that, some transactions require guaranteed funds. It is one of the reasons behind the rejection of personal checks since they do not assure funds.

But the cashier's check and money order guarantee funds. It would be best to note that these payment options have backing from third parties.

These safer forms of payment have some close similarities that usually confuse people. Research shows that these two payment methods are not the same.

The main difference between a cashier’s check and money order is that the former is ideal for larger purchases, and the latter is suitable for smaller amounts.

Comparison Table (Cashier’s Check vs Money Order)

  Basic Terms  Cashier’s Check  Money Order
  CostMore Expensive  Less Expensive
  TrustMore securedLess secured
Maximum IssueLarger amountsHave maximum limits around $7000 to $1000
Where to get ThemBanks and credit unions onlyPost offices, banks, grocery stores, and convenience stores
Funds AvailabilityThe first $5000 is readily available within one dayThe first $200 is readily available within one day
Where to UseCircumstances that need more security.  The payment that is over $1000Sending money overseas   For mailed payments   Prevent check to bounce
Cashed byReceiver name  Anyone
 LegitimacyMore Legit  Prone to fraud
 ConvenienceDifficult to get  Easier to get

What Is a Cashier’s Check?

It is a type of official check issued by the bank or financial institution. It would be best to note that the cashier’s check and a certified bank check are not the same.

Cashier’s check is drawn by the bank while the certified check is signed by the depositor. The good news is that the bank or financial institutions are responsible for issuing both checks.

The recipient is sure of getting the funds since it is drawn based on bank funds. The feature makes the cashier's check the most trusted and secured form of payment.

The form of payment is ideal for larger payments that are over $1000. But you might incur some extra fees when using a cashier’s check.

What Are the Advantages of Using a Cashier's Check?

Below are some of the benefits of using a cashier’s check:

👍More Security

Banks or financial institutions are responsible for filling a pay-to-the-line. It helps to reduce the risk of misplacing the money order slip or someone filling in using a different name.

The payment option guarantees protection in case of fraud or scammers. Financial institutions take insurance to tighten security against fraud or errors.

👍Larger Purchases

Cashier’s checks usually have higher limits. It is one of the reasons behind the form of payment being ideal for undertaking transactions involving large amounts.

It would be best to note that the amount depends on the bank or financial institution. These financial institutions usually issue unlimited amounts of money.

Keep in mind that the bank will put on hold checks that have over $5000. The tactic helps to confirm the transaction and inhibit any form of fraud.

👍Legitimacy

The recipient has an assurance of getting the money checked out. The deal usually involves the recipient and the bank. Besides that, the recipient has a guarantee of getting the funds from the bank.

Research shows that many people prefer taking cashier’s checks over other payment forms due to their legitimacy. It is one of the reasons behind their rapid growth in the banking industry.

👍Funds Availability

The processing period of funds on the cashier’s check usually takes 24 hours. Many people tend to find it more convenient when dealing with large sums of money.

But amount more than $5000 will be put on hold for confirmation of transactions. The rule is upheld by many financial institutions to curb money laundering businesses and scammers' activities.

What Are the Disadvantages of Using Cashier’s Check?

Below are some of the shortcomings that involve the use of a cashier’s check:

👎Cost

The processing fee for a cashier’s check is more expensive when compared to other payment forms. But it would not be a big deal for those individuals to process large amounts regularly.

The cost would be super expensive for individuals transacting small amounts once. Most financial institutions usually charge about $10.

👎Inconvenience

Picking the cashier’s check and processing tend to consume a lot of time. Besides that, this payment form is not ideal for sending money globally.

Most financial institutions need to confirm transactions before going ahead to process the funds. It implies that the funds will be upheld for some days, and this might inconvenience you.

👎Loss

Financial institutions guarantee protection to the users of cashier’s checks in case of error or fraud. The protection assures an individual of getting the funds or inhibiting fraudsters from accessing the money.

You might incur a loss when the check and the receipt get lost. There is nothing much the bank will do in such situations. Keep in mind that carrying around a cashier’s check is like having large sums of money in the pocket.

Circumstances Under Which Cashier’s Check Is Used

  • If you want to make a major transaction like buying a house or boat that involves large sums of money.
  • When you are looking for maximum protection against loss or theft of money while undertaking a crucial transaction.
  • Where the payee is looking for instant money access after the transaction.
  • If you are looking for a payment option that can be done in a bank or online.
  • If an individual does not mind getting charged a processing fee.

What Is a Money Order?

It is a type of payment slip guaranteed by a third party. It is described as a certificate that entitled the bearer to get the amount stated on it.

The payment slip can be bought from a bank, postal service, convenience stores, grocery stores, and check-cashing companies.

The payment form is relatively safer when compared to personal checks. It would be best to note that you can deposit the money order into your bank account.

You would be expected to pay for money orders using cash, debit card, and traveler’s check. Keep in mind that credit cards and personal checks cannot be used to purchase a money order.

Another crucial thing to note is that stolen or lost money orders can be replaced. Keep in mind that the process of replacing the stolen money order is super easy.

But you will be charged a replacement fee by the money order issuer. The replacement process is usually instant since it does not come with a waiting period.

What Are the Advantages of Using Money Order?

Below are some of the benefits of using money order:

👍Convenience

Obtaining a money order from the issuer is super easy. These payment options are readily available at the postal office, small shops, banks, grocery stores, and more.

Besides that, a money order is ideal for global funds transfer. The recipient can also process money orders from any financial institution.

👍Optimum Security

Cases of fraud and scams have been on the rise of late. Institutions issuing money orders have tried to seal loopholes and reduce the risks associated with scams or fraud.

You can cancel the money order before it gets cashed out. It applies to situations where the payment slip got lost or stolen and change of mind.

👍Affordable

Money order acquisition is inexpensive. It usually comes with a lower fee regardless of the amount being transacted. The barriers to entry are minimal.

It would be best to note that there is no need of having a bank account to cash the money order. You can access your money from anywhere at any time.

What Are the Disadvantages of Using Money Order?

Below are some of the cons associated with money orders:

👎Low-limit

Money orders have limits when it comes to the amount supposed to be transferred and cashed. These payment slips cannot send an amount of more than $1000. It is not an ideal option for sending large sums of money or cashing out big-ticket items.

👎Prone to Fraud

These payment slips are a popular tool for fraud. You need to be extra careful when dealing with money orders. Always confirm from the recipient if he or she received the right amount.

👎Lack Legitimacy

Telling between a fake or original money order can be challenging. The payment slips lack impressions that help to tell the legitimacy as seen in the cashier’s check. It is one of the reasons why scammers find it easier to forge money orders.

Circumstances Under Which Money Order Is Used

  • If the payee needs instant access to money.
  • When making a payment of less than $1000.
  • When you want a highly accessible payment instrument.
  • If you want to make payment while not having a bank account.
  • Where you are confident that the money order won’t get stolen or lost.
  • When you want an inexpensive method of paying bills or transfer funds.

Main Differences between Cashier’s Check and Money Order

📌Maximum Issue

The maximum amount limit happens to be the key difference between a money order and a cashier’s check. Money orders are ideal for smaller amounts while their counterparts are suitable for large sums of cash.

📌Trust

Credibility is yet another crucial factor to consider when telling the difference between a money order and a cashier’s check. It would be best to note that money orders are perceived to be less secured and may not be accepted in some situations.

📌Cost

Cashier’s checks are more robust instruments with much credibility. It is one of the reasons behind the higher processing fee when compared to money orders. It would be best to note that a cashier’s check is more expensive than a money order.

📌Fund Availability

The processing time for a money order is usually longer than that of a cashier’s check. Many financial institutions take 24 hours to process a cashier’s check while that of money order might take about two to three days.

Similarities between Cashier’s Check and Money Order

Both these payment instruments have common features. These are the things that usually confuse many people when dealing with a money order and cashier’s check.

These similarities include:

📌Check-Like

Both these instruments can be deposited in the bank account like checks. Besides that, the recipient can cash the amount if the bank allows him or her.

📌Safer Instruments

Most people prefer dealing with secured means of payments. Both cashier’s checks and money orders are safer than personal checks.

But the seller needs to verify the legitimacy of each instrument before accepting. Some might be fake or bounce upon cashing in a bank.

📌Difficult to Back out

The process of canceling money orders and cashier’s checks is challenging. It can be worse in a scenario where the recipient has cashed out the funds.

📌Private

Both the cashier's check and money order lack the recipient's valuable information like checking account number. It is something that makes these instruments safer than personal checks.

Personal checks tend to contain valuable information that might be risky to expose to an unknown person making the payments.

📌Sourced from Financial Institutions

Both cashier’s check and money orders can be obtained from banks. The accessibility of banks makes these payment instruments readily available. Besides that, the recipient can cash out the funds from the bank at a small cost.

In Conclusion

A cashier’s check is an excellent option for large amounts and infrequent purchases. The unlimited dollar and strong security make this instrument of payment the best option for you.

If you are undertaking small daily transactions, it would be best to consider a money order over a cashier’s check. Making routine transfers is much affordable and secure.

Keep in mind that a cashier’s check is more protected than a money order since it is managed by the financial institution. There are minimal risks of fraud or getting scammed.

Take the time to read through the pros and cons of each instrument before making the decision. The information provided in this article is authentic and will help you make an informed decision.

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