difference between a cashiers check and a money order

The Difference Between a Cashier’s Check and a Money Order

When it comes to making a secure payment, there are a variety of options available. Two commonly used methods are cashier’s checks and money orders. Although they can seem very similar, there are some key differences between these two payment types. In this article, we’ll explore what sets them apart.

Cashier’s Checks

A cashier’s check is a document that’s issued by a bank, and it’s drawn from the bank’s own funds. When you request a cashier’s check, the bank will withdraw the required amount of money from your account and hold it until the check is cashed. This means that the funds for the payment are guaranteed and cannot be bounced back. Once you have the cashier’s check, you can use it to make a payment to whoever you choose.

One important thing to keep in mind is that cashier’s checks often come with a fee, which can vary depending on the bank. For example, a bank may charge you $10 or more for a cashier’s check. The upside is that these checks are often accepted as a more secure form of payment by organizations, such as a landlord or a car dealership.

Money Orders

Money orders are similar in that they’re a secure form of payment, but they’re not issued by a bank. Instead, you purchase a money order from a third-party issuer, such as a post office or a convenience store. You’ll pay the face value of the money order plus a small fee to the issuer.

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Once you have the money order, you can fill in the name of the payee and the amount of the payment. This gives you more control over the payee and the amount of the payment than if you were sending cash. Just like a cashier’s check, the funds for a money order are guaranteed.

The downside of money orders is that they’re not always accepted by all organizations. Some landlords and car dealerships may prefer a cashier’s check because it’s issued by a bank.

Key Differences

The main differences between a cashier’s check and a money order are the issuer and the fee. Cashier’s checks are issued by a bank while money orders are issued by third-party agencies. Additionally, cashier’s checks often come with a higher fee than money orders.

Another difference is in the acceptance of these payments. Cashier’s checks are generally more widely accepted than money orders. This is because the banks that issue cashier’s checks are considered a more secure source of funds than a third-party issuer.

Conclusion

Whether you should use a cashier’s check or a money order depends on the specifics of your situation. If you need to make a payment that requires a high level of security, such as a down payment on a house or a car, a cashier’s check may be the best option. If you only need to send a smaller payment and you’re working with someone who accepts money orders, then a money order may be more practical. Both methods offer secure and guaranteed payment, so you can make your choice based on your specific needs.

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Table difference between a cashiers check and a money order

Cashier’s Check Money Order
Definition A check issued by a bank or credit union, typically used for large purchases or transactions that require guaranteed funds. A prepaid money order purchased from a post office, bank, or other financial institution, typically used for smaller purchases or transactions.
Issuer Issued by a bank or credit union. Can be issued by a bank, post office, or other financial institution.
Cost May be more expensive than a money order, but the fees vary by institution. Costs typically range from 50 cents to a few dollars, depending on the institution.
Validity Valid as long as the bank or credit union exists. Expires after a certain period of time, usually within one to three years of the issue date.
Amount Limit Can be used for larger amounts, typically up to $10,000 or more. Typically limited to amounts under $1,000.
Verification Can be verified by contacting the issuing bank or credit union. Can be verified by contacting the issuing institution.
Usage Used for larger purchases or transactions that require guaranteed funds, such as real estate transactions or large purchases. Used for smaller purchases or transactions, such as paying rent or sending money to friends or family.