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What's the difference between a money order and a cashier's check?

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Question: What’s the difference between a money order and a cashier’s check?

Money orders are similar to cashier’s checks. They’re documents you can use to make payments, and they’re guaranteed by somebody. They even look alike. However, there are a few differences.

Maximum limits: a major difference between money orders and cashier’s checks is the dollar limit; money orders often have maximum limits. For example, you may find it hard to get a money order for more than $1,000 -- actual limits depend on the issuer. Cashier’s checks, on the other hand, are available in much larger amounts (they're commonly used for a down payment on a home).

Where to find them: you can buy money orders by walking into any place that sells them -- a grocery store, post office, or retailer, for example. You can even get them at some banks. However, cashier’s checks are only available at banks, and you generally have to have an account at the bank to get one. If you don’t have a bank account, or if there’s no branch nearby, you'll have a hard time getting a cashier's check quickly (you can sometimes order cashier's checks online, by mail, or fax -- but banks might restrict who the check is payable to and where it gets sent). It's not impossible to get a cashier's check without a bank account, but it's a challenge.

Trust: credibility is another difference between money orders and cashier’s checks. Cashier’s checks are drawn against a bank, while money orders are issued by other types of organizations. Sometimes a money order is perceived to be less secure than a cashier’s check and will not be accepted as a substitute. However, cashier's checks (like money orders) can be fakes and are sometimes used in scams.

Cost: cost is always important. Cashier’s checks are generally more expensive, which makes sense if you consider the differences listed above; they just have more horsepower. They're also issued by banks, which don't have much of a low-cost reputation like most mass retailers. However, cashier's checks can be less expensive in some situations. If you can pay a single fee for a large cashier's check or multiple fees for multiple (maximum dollar limit) money orders, the single fee might be better.

"Stop payment" or cancellation: what happens if you lose one of these instruments or it gets stolen? You'll want to get your money back or you'll want a replacement, of course. This is much easier with a money order (be sure to keep your receipt). With a cashier's check, you might need to wait 90 additional days, and that will be a bummer unless you have a lot of extra cash on hand.

Similarities

Sometimes it's helpful to compare and contrast. So what are some of the similarities that cashier's checks and money orders share?

  • Whoever receives one of these instruments will deposit it like a check
  • Both are considered to be safer for recipients than personal checks because they're guaranteed (the question is who guarantees the instrument)
  • Your checking account number does not appear on a money order or cashier's check, so it's safer than handing over a personal check with lots of valuable information (assuming you don't know or trust whoever you're paying)
  • You can attempt to cancel either one, but the process can be cumbersome and if it's already been cashed you'll be out of luck

 

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