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Cashier’s checks and money orders are two common payment instruments. While there are similarities between the two, there are also significant differences. Cashier’s checks are drawn on a bank account and guaranteed by the financial institution. A money order, on the other hand, is a prepaid financial tool that you can obtain at banks, the post office, or retail businesses.
Depending on your needs, one payment method may be a better choice than the other. Read on to learn what distinguishes a money order from a cashier’s check, the way they work, plus the pros and cons of each.
Key Points
• Banks issue and back cashier’s checks, making them a secure option for larger payments.
• Money orders are prepaid financial instruments that you can purchase at various locations, offering more accessibility than cashier’s checks.
• Both payment methods provide guaranteed funds, ensuring that transactions do not bounce due to insufficient funds.
• Cashier’s checks typically have higher fees and no maximum amount, while money orders often have lower fees and a cap of $1,000.
• The choice between a money order and a cashier’s check depends on factors such as the size of payment you’re making and whether or not you have a bank account.
Currently, SoFi does not provide either money orders or cashier’s checks.
What Is a Cashier’s Check?
A bank or credit union issues cashier’s checks, also known as bank checks. You can obtain a cashier’s check by paying cash upfront or, if you’re a customer of the issuing bank, drawing the funds from your bank account.
Because the bank backs the cashier’s check, it’s guaranteed, so you don’t have to worry about a bounced check. That’s why it’s considered a safe and secure method of payment. Cashier’s checks also clear quickly, usually making some funds available within one business day.
Cashier’s checks are available in small and large amounts, and there’s no limit to the amount. Many people use a cashier’s check for a large purchase or deposit, such as a car, a boat, the down payment on a home, or a security deposit to a landlord.
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How Do Cashier’s Checks Work?
In most cases, you’ll visit your bank in person to buy a cashier’s check. You may be able to order one via the bank’s website, but that takes longer since the check will have to go through the mail.
At the bank, the process involves telling the bank employee the amount of the check and the recipient’s name. You can either purchase the check with cash or have the money debited from your checking or savings account at the bank. Cashier’s checks often come with a fee, usually about $8 to $15.
Don’t have a bank account? You may be able to get a cashier’s check from a bank at which you’re not a customer, but you’ll have to check with the financial institution first and purchase the cashier’s check with cash.
Credit unions may offer you more flexibility if you’re not a customer. They often issue cashier’s checks to members of other credit unions.
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What Is a Money Order?
Like a cashier’s check, a money order is a form of paper payment and an acceptable alternative to paying a bill or debt with cash or a check. You can purchase a money order with cash, traveler’s checks, or a debit card. Since a money order is prepaid, it can’t bounce like a regular check can.
Filling out a money order is similar to writing out a check. Besides the amount to be paid and the date of issue, you’ll need to fill out your name, your address, and the name of the payee and then add your signature. In the memo line, you can fill in the reason for payment.
There may be limits on the money order amount. For example, at a United States post office, a single money order can’t exceed $1,000.
You’ll also get a receipt when you purchase a money order, which you should keep so you can track your money order and, if the payment is lost or stolen, use it to try to recover the funds.
Money orders can be obtained at numerous places, including post offices, Western Union and similar retail businesses, check-cashing outlets, financial institutions, supermarkets, and convenience stores. Along with paying the face value of the money order, you may have to pay a small fee.
People who want to cash a money order can generally do so at the same places that offer them. Unless you deposit it into a bank account, be aware that you may have to pay a small fee for cashing the money order.
Money Orders vs Cashier’s Checks
While money orders and cashier’s checks have some similarities, there are also differences. Here’s how they compare.
Similarities
Both money orders and cashier’s checks are forms of payment that can be alternatives to cash or a personal check. Because they are prepaid, you can cash or deposit a money order or a cashier’s check without worrying that it’ll be declined or returned for insufficient funds.
Money orders and cashier’s checks share the following features:
• You can purchase both at banks or credit unions.
• Both are prepaid, so their funds are guaranteed.
• They provide more payer privacy because neither contains your checking account number.
• Each typically comes with fees.
• They allow you to trace or track payments.
Differences
Now, consider their differences,:
• Cashier’s checks may be available in large sums, while money orders often have limits.
• You can obtain money orders at more locations than cashier’s checks.
• Cashier’s checks are guaranteed by the financial institution that issued them; money orders are paid for with cash.
• Money orders must usually be purchased in person.
• The fees on money orders may be lower.
Differences Between a Money Order and a Cashier’s Check
How money orders and cashier’s checks compare in chart form.
| Money Order | Cashier’s Check |
|---|---|
| Minimal fees, as low as $1, depending on the provider | Higher fees, from $8 to $15 |
| Generally have a maximum limit of $1,000 | No federally mandated limit on the amount |
| Backed by the outlet that sold the money order | Backed by the bank that sold the cashier’s check |
| Can be purchased more widely | Can only be purchased at a bank or credit union |
| Must be bought in person | May be purchased through a bank’s online portal |
| The payer must fill in the “pay to” line, or else anyone can cash it | The bank or credit union cashier fills out the recipient’s name, so only the payee can cash the check |
| No expiration date, but should generally be cashed within one to three years to avoid difficulties and fees | No expiration date, but may be considered stale-dated/overdue depending on bank policy and applicable law |
Pros and Cons of Cashier’s Checks
Let’s take a closer look at the advantages and disadvantages of cashier’s checks. First, the pros:
• Available in higher dollar amounts
• Higher security because the bank guarantees it
• May be purchased through a bank’s website
Next, the cons:
• Not as widely accessible because you can only obtain them at banks or credit unions
• Harder to get from a bank if you’re not an account holder
• Higher fees than money orders
Pros and Cons of Money Orders
Here’s a closer look at money orders and their benefits and downsides. First, the pros:
• Useful for people who don’t have a bank account
• Can be purchased with cash or a debit card
• Has lower fees than a cashier’s check
• More widely and readily available
Now, the cons:
• Typically can only be purchased for up to $1,000
• Must get them in person
• May not be able to deposit them through mobile banking
• Can be cashed by anyone if you don’t fill out the “payment to” line
The Takeaway
Both cashier’s checks and money orders are forms of prepaid payment that guarantee the funds, so you don’t have to worry about a bounced check. Which one to use depends on many factors, including the size of the payment you’re making, whether you have a bank account, and the outlet where you choose to make the purchase. Assessing the pros and cons of each can help you decide which method is right for you.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
Are a cashier’s check and a money order the same?
No. While both are prepaid forms of payment and therefore guaranteed not to bounce, you can only get a cashier’s check at a bank or credit union, while money orders are more widely available at other venues, including post offices, check-cashing places, and various retailers. Cashier’s checks are better for large purchases or deposits since there’s no monetary limit, while money orders often have a limit of $1,000.
Why would someone use a money order instead of a cashier’s check?
People who choose to use a money order may not have a bank account and could be paying a bill or a debt of less than $1,000. They might also want to avoid the higher fees associated with a cashier’s check.
How quickly do money orders and cashier’s checks clear?
In most cases, funds from deposited money orders and cashier’s checks are available the next business day. However, if the bank suspects fraud might be involved, it could take several weeks.
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