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Cashier’s Check vs. Money Order: How to Decide

Banking, Banking Basics
Money Order or Cashier's Check? When to Buy Which

What’s the difference between a cashier’s check and a money order? And how do you choose? Money orders often are limited to $1,000, but cashier’s checks can be used for larger purchases. Cashier’s checks, however, cost more, and usually are available only at your bank or credit union.

Here are more details to help you pick the best payment method.

Cashier’s checks are better for big purchases

Say you want to spend $5,000 on a used car, but the seller won’t accept that little piece of paper from your checkbook. If you’re not keen on carrying around large amounts of cash, you need some other form of guaranteed payment.

In this case, a money order would come up short. Many businesses won’t issue a money order for more than $1,000. So for that used car, a cashier’s check would be the better choice.

If you needed to make a $500 deposit for an apartment and couldn’t use a check, a money order would be wiser because it’s generally less expensive than a cashier’s check.

Money orders are cheaper

Wal-Mart has some of the best prices for money orders, charging 70 cents for amounts up to $1,000. The U.S. Postal Service charges from $1.20 to $1.60, depending on the amount. Banks often charge around $5, but they may waive the fee for premium customers.

Cashier’s checks, sometimes called official checks, don’t have the $1,000 limit, but they usually cost more than money orders. Cashier’s checks in any amount will set you back around $10. Some banks and credit unions waive fees on cashier’s checks for customers with premium accounts. Ask your financial institution if you qualify.

Money orders are easier to buy

You can buy money orders at post offices, some retail stores, banks, money transfer outlets and elsewhere. Going to a supermarket to buy milk? You could also pick up a money order at the customer-service counter.

Cashier’s checks, on the other hand, usually are available only from financial institutions.

If you’re hoping to buy either one online, you won’t have much luck. Issuers generally require that you visit a physical location to buy a money order or cashier’s check. If that’s not an option, you could ask your recipient to let you send money online instead.

Cashier’s checks are a little safer

If you lose a cashier’s check or money order, or if it’s stolen, you can take steps to recover your money. You’d generally need to go to the issuer with your receipt and ask for a refund. That makes either option better than carrying cash.

But cashier’s checks offer a bit more protection, since the financial institution fills out the “pay to” line, instead of the purchaser. Compare that with writing a money order, which is similar to writing a check; the purchaser has to fill in the recipient’s name. If the purchaser loses the money order before filling in the recipient’s name, anyone could cash it. And once someone cashes that money order, you more than likely won’t get your money back.

If a money order or cashier’s check is cashed fraudulently, the purchaser could contact police and work through the legal system to try to recover the money.

An official check drawn up by a financial institution may seem more credible to a recipient than a money order from Bob’s 24-Hour Market. But either option is a good way to offer guaranteed payment.

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: mburnette@nerdwallet.com. Twitter: @margarette.

Updated March 27, 2017