If you need to make a secure payment from your bank account, you may consider using a cashier’s check or money order. But even though these two payment methods share similarities, there will be times when it makes sense to use one over the other. Let’s take a deeper look at the differences between a cashier’s check and money order so you can decide which method works for your money transfer needs.
How cashier’s checks work
Also known as an “official check,” a cashier’s check involves you paying the bank to withdraw their funds in the form of a check. That way, the bank can guarantee the check’s safety and dollar amount. This is different from a personal check, where you, the checkwriter, guarantee its safety and dollar amount.
Here are some features and benefits of cashier’s checks:
·Dollar limit: You can typically withdraw a cashier’s check for a dollar amount up to $10,000. However, different banks will have different policies regarding cashier’s checks (some may have no limits, under certain conditions). Check with your bank to understand their policy regarding cashier’s check limits.
· Location: Typically, cashier’s checks can only be taken out at a bank where you already have a checking or savings account. This way, the bank can guarantee the safety of the check.
· Safety: Cashier’s checks are some of the safest ways to make large payments. Since the bank guarantees the safety of the check, it will be less likely to bounce, meaning they are often a preferred method of payment by certain vendors.
How money orders work
Similar to a cashier’s check, a money order is a payment method used to move large amounts safely. The biggest difference, however, is that money orders can be taken out by institutions other than a bank. Here are some features and benefits money orders offer:
- Dollar limit: Money orders typically have much smaller dollar limits than cashier’s checks. The average dollar limit for a money order is around $1,000. That being said, you can take out multiple money orders at one time.
- Location: Money orders can be taken out by financial institutions other than a bank, such as financial services companies, grocery stores, and pharmacies. This can often make them a more convenient option than cashier’s checks.
- Safety: Since they’re not backed by a bank, money orders technically aren’t considered as safe as cashier’s checks. Still, they are considered a much safer option than personal checks.
Should I get a cashier’s check or money order?
When deciding between a cashier’s check and money order, consider what kind of purchase you need to make. If you’re paying for rent and that amount is larger than $1,000, then a cashier’s check may make the most sense. But if you need less than $1,000 to make a purchase or send money to a loved one, you may want to consider taking out a money order. Whichever option you choose, both forms of payment are considered safer than a check or cash, especially if you need to make a purchase where the seller needs guaranteed safety.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.