There are some situations where you can’t make a payment with a check, credit card, cash, or even a debit card. In those instances, a cashier’s check or money order may be the preferred form of payment.
Both are useful financial tools, but they do have some critical differences, so it’s not so much that one is better than the other, but instead, there are circumstances where one is a better choice than the other.
We’ll explain everything you need to know about cashier’s checks and money orders so you know which form of payment can get the job done for you.
What Is a Cashier’s Check?
A cashier’s check is a form of guaranteed payment because its value is drawn from the bank’s funds rather than the purchaser’s funds. In other words, people like it because they know the bank won’t “bounce” the cashier’s check. They have no such assurance about that personal check you just wrote them. Plus, a cashier’s check has no dollar limit.
Where to Get a Cashier’s Check
Any bank or credit union will issue a cashier’s check, but in most cases, you must have a bank account with the issuing institution. Credit unions tend to be more flexible about this than traditional banks.
If you use a digital or online bank or your brick-and-mortar bank has online features, you may be able to order a cashier’s check online. Log in to the website and choose the account you want the money for the check to be drawn from. The check will then be mailed to your address, and you will need to bring or send it on to the payee. Do keep in mind that this will add a few days to the process, so if your need is time-sensitive, it will be better to go and purchase the cashier’s check in person if that’s possible.
Cashier’s checks are not as widely available as money orders are. They are mostly available at banks and credit unions. It can be tough to figure out where to get a cashier’s check without a bank account. Some banks and credit unions may allow you to do so; it’s worth calling a few in your area to ask. If you find an institution to accommodate you, you’ll need to bring cash to make the purchase.
How to Get a Cashier’s Check
You can buy a cashier’s check from a bank teller. Be sure to bring photo identification, the amount of the check, and the payee’s name. The information will be printed on the check. You can’t write in anything by hand or cross out and hand correct any mistakes, so all of the information you provide to the teller must be correct. The teller will print and sign the check, and it’s ready for use.
The amount of the cashier’s check plus the cost of the check will be taken from your checking or savings account and transferred to the bank’s account. A cashier’s check will typically cost between $10 and $15 and sometimes a small percentage of the amount of the check. However, some banks and credit unions will waive the fee if an account holder meets certain criteria like maintaining a minimum balance.
When to Use a Cashier’s Check
Most people don’t need to buy a cashier’s check all that often. They are typically required for large transactions where paying in cash isn’t practical. One of the most common uses for cashier’s checks is in real estate transactions. Many landlords require that apartment deposits be paid by a cashier’s check because they’re guaranteed to get the money before letting the tenant move into the apartment.
Or if you’re buying a car. The seller isn’t likely to let you drive away until they know payment for the car or the downpayment is secured. If a transaction is time-sensitive and cash isn’t a practical option, a cashier’s check is useful. A personal check can take a couple of business days to clear, but the funds from a cashier’s check will be available immediately.
How to Cash a Cashier’s Check
You can cash a cashier’s check at the bank or credit union that issued it even if you are not a customer. If you’re not a customer, you’ll probably be charged a small fee. Check-cashing stores and Walmart check-cashing locations will also cash these checks for you.
Be sure to bring identification, in fact, bring two forms. Some entities require two pieces of valid ID to cash a cashier’s check.
Alternatives to a Cashier’s Check
If you can’t get a cashier’s check, you may be able to substitute a money order. You could also give cash to a trusted friend or relative who does have a bank account and have them buy the cashier’s check for you.
What Is a Money Order?
A money order is essentially a prepaid check, a form of guaranteed payment. Money orders are much less expensive and can be purchased in more locations than can cashier’s checks. However, money orders have a value limit of $1,000 each.
Where Can I Get a Money Order?
Money orders are available in many places and are easily accessible to everyone. You can buy one at many grocery and chain retail stores, drug stores, and some convenience stores. Stores that sell money orders typically have a MoneyGram or Western Union logo posted somewhere.
Many, but not all, post offices sell money orders. Before you go stand in line, call ahead and ask if your local branch carries them or not. Banks and credit unions will sell money orders, and you don’t have to have an account with those institutions to buy one. But most banks, even digital banks, don’t sell money orders online. Other financial establishments like Western Union offices and payday lending stores sell money orders too.
Is it possible to buy a money order online? It is, but it’s also risky. Before turning over your financial information, do your research to ensure the company you’ll be dealing with is reputable. And while there are legitimate online companies that sell money orders, they charge more than places like grocery stores and the post office.
Money orders are inexpensive ranging in price from less than $1 up to $10. Retail and grocery stores generally have the lowest prices and banks the highest. However, some banks may waive the cost for account holders who meet certain criteria like maintaining a minimum account balance.
How to Get a Money Order
Know the exact amount you need for the money order and who you’re paying with it. If you need more than $1,000, you can simply buy multiple money orders. For instance, if you need to send someone $2,500, you can buy two money orders for $1,000 each and one for $500.
To pay for a money order, you will usually need cash or a debit card. Can you buy a money order with a credit card? Some issuers will make the claim that you can, but what’s probably happening is that you’re using your credit card to take a cash advance.
This isn’t ideal because taking a cash advance on a credit card works differently than making a purchase on one. There is no grace period to pay back the money without accruing interest. The second you take the cash, the interest starts accruing on that amount. And many cards charge a higher interest rate for cash advances than they charge for purchases.
Personal checks typically can’t be used either because the issuer can’t be sure that your check won’t bounce. Money orders have to be paid for with a source of guaranteed funds, which means cash or a debit card.
How to Fill Out a Money Order
It’s fast and easy to fill out a money order:
- Fill in the name of the payee on the line that reads “Pay to the Order Of.” The name of this person or business will be the only one who can deposit or cash the money order. Be sure to fill this out immediately. If you were to lose the money order before doing so, anyone could find it, fill out his or her own name, and cash or deposit it.
- Write your name and address in the purchaser section. This will allow the payee to know who the money order is from and how to contact you if there is a problem.
- If you’re paying a bill, include your account number in the “Payment For/Account Number” section, so the payee knows where to credit the payment.
- Sign at the bottom where it reads “Purchaser’s Signature.” Your signature makes the money order official as it does with a personal check. Don’t sign the back of the money order, again, like a personal check, that signature line is for the payee.
Be sure to keep the receipt for the money order in case there are any problems. It gives you proof of payment and assures the payee that the funds are guaranteed.
When to Use a Money Order
For those who don’t have a bank account, money orders can be the best way to pay for things like rent and utilities. Sending cash in the mail is risky, and visiting a payee’s office can be time-consuming, particularly if you’re paying utilities that way. There is often a long line of people there for the same reason.
Suppose you are making a semi-large purchase (too large to carry that much cash but not large enough to require a cashier’s check) like buying a piece of furniture from a local online marketplace such as Craigslist or Nextdoor. In that case, a money order can be a good solution. If you don’t want the payee to know your checking account and bank’s routing number as they would have if you gave them a personal check, a money order is a good alternative.
How to Cash a Money Order
Essentially, you can cash a money order at any place that sells them. You don’t have to take the money order to the location or entity that issued it in order to cash again. As mentioned above, not all post offices will cash a money order so be sure to call ahead to check.
Many entities do charge a fee to cash a money order, but you can sometimes minimize these fees by cashing them at your bank or at the location that issued it. You’re required to sign the back of the money order as you would a personal check. Some entities require that an employee witness your signature, so wait until you’re being helped to do so. You’ll need to provide valid identification like a driver’s license or passport.
Money Order Alternatives
If for some reason, you can’t use a money order, a prepaid debit card is an alternative. These can often be purchased at grocery, retail, and drug stores.
Takeaways (“Too Long, Didn’t Read” Version)
- Both cashier’s checks and money orders are forms of guaranteed payment.
- Cashier’s checks often require a bank account.
- Cashier’s checks have no dollar limit, while money orders are only available up to $1,000.
- Money orders are more widely available than cashier’s checks.
- Money orders are less costly than cashier’s checks.