Cashier's check vs. money order: Which one should you use?
Cashier's checks are better for larger transactions and require a bank account, while money orders are more accessible, have lower fees, and are ideal for smaller payments.
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Writer
Logan Moore is a writer and editor with a passion for simplifying intricate financial concepts into easily understandable content.
Updated April 11, 2024, 8:37 PM EDT
Written by
Editor
Hanna Horvath is a CERTIFIED FINANCIAL PLANNER™ and Red Venture's senior editor of content partnerships.
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Let’s say you need to make a big purchase — like buying a car, making a down payment on a home, or sending money to a family member. You probably want to be extra sure your payment goes through.
This is where cashier's checks and money orders come into play. Both payment methods offer a secure alternative to cash or personal checks. But despite their similarities, cashier's checks and money orders have some key differences. Here’s what you need to know.
Which should I use: cashier’s check vs. money order
Cashier's checks are best for bigger transactions, such as:
- Buying a car or boat
- Making a down payment on a house
- Paying a security deposit on a rental property
- Large business transactions
Money orders are great for smaller transactions, like:
- Paying rent
- Sending money to family or friends
- Buying something online
- Paying bills
What is a cashier’s check, and how does it work?
A cashier's check is issued and guaranteed by a bank or credit union. When you request one, the bank takes the money from your account and puts it into their own. Then, they write the check from their account, ensuring the funds are secure and the check won't bounce.
Cashier’s checks are typically used for larger amounts (over $1,000). They require you to have an account with the institution you’re getting the check from. They may also come with fees, typically higher than a money order.
Pros
- Highly secure due to bank guarantee
- No maximum limit
- Funds available to the payee within one business day
- Serves as proof of payment for record-keeping and dispute resolution
Cons
- Fees vary depending on the bank and the amount
- Requires visiting a bank branch during business hours
- Rare instances of counterfeit checks
What are money orders, and how do they work?
A money order is a prepaid financial tool that works like a check. You pay for the money order upfront, plus a small fee. The issuer gives you a secure document that you can use to pay someone else. This is why money orders are considered safer than personal checks.
Unlike a cashier's check drawn on bank funds, a money order is pre-paid by the purchaser.
Money orders don’t require a bank account — you can often buy them at post offices, grocery stores, and other cash-checking spots. Some issuers may require identification verification or limit the number of money orders you can buy. Money orders are also typically capped at $1,000.
Pros
- Widely available and convenient
- Lower fees compared to cashier's checks
- Secure and prepaid
- Doesn’t require a bank account
- Some issuers offer international money orders
Cons
- Maximum limit of $1,000 or less
- Difficult to track and replace if lost or stolen
Comparing cashier's checks and money orders
When should you use a cashier’s check or money order?
The best choice between a cashier's check and a money order depends on your specific needs. Here's when to use each one.
Use a cashier's check for:
- Big purchases, like buying a car or making a down payment on a house. Cashier's checks have high limits and are super secure.
- Business transactions, especially with new partners. The guaranteed funds and security features make cashier's checks great for business.
- Real estate deals, like paying deposits or closing costs. Cashier's checks are commonly used because they're reliable and can handle large amounts.
Use a money order for:
- Smaller purchases, like paying rent, bills, or online shopping. Money orders have lower fees and are easier to get.
- Sending money to family or friends, even if they don't have a bank account or live far away. Money orders are simple to buy and mail.
- Paying bills when you don't have a checking account or don't want to use personal checks. Many companies accept money orders.
- Online purchases from individuals or less-known businesses. Money orders are prepaid, so you don't risk exposing your bank or credit card info.
Your decision comes down to how much money you're dealing with, what the payment is for, and what you prefer.
The bottom line
Cashier's checks and money orders are both secure ways to make payments. They offer guaranteed funds and built-in security features. Cashier's checks are better for larger purchases and require a bank account. Money orders are easier to get, cost less, and are better for smaller payments.
To decide which one to use, think about how much you need to send, how easy it is to get the check or money order, and what fees you'll pay. That way, you can pick the best one for your situation.
Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.