Cashier's check vs. money order: Speed, cost and security compared

When to use each payment method

The right payment method depends on your transaction size, how quickly you need the money to move, and whether you have a bank account. Each option has its own benefits that work best in different situations. Your choice may also depend on your overall banking needs, such as whether you require services like issuing cashier's checks or money orders.

Best use cases for cashier's checks

Cashier’s checks stand out for large transactions where payment certainty is a vital part of the deal. You can get a cashier's check by visiting your bank or credit union and requesting one for the exact amount you need. These checks pull funding straight from the bank’s funds, not the person's account, and come with the bank’s guarantee. Cashier's checks are backed by the bank's funds and bank guarantees, providing extra security for both parties. A bank teller signs and issues the cashier's check, ensuring the payment is validated. They’re perfect for buying vehicles, making a down payment on a house, providing a security deposit for a rental, or paying closing costs. You should use a cashier's check for larger purchases or when a seller requires guaranteed funds. You won’t have to worry about the check bouncing because banks verify the funds before issuing it.

Cashier’s checks are also a great way to get money quickly. The person receiving the check can usually access their money by the next business day after they deposit or cash it. This makes them ideal if you can’t wait around for a personal check to clear.

There’s another reason to pick a cashier’s check - they work great for payments over $1,000. Money orders stop at $1,000, but cashier’s checks don’t usually have an upper limit, making them suitable for larger purchases. These checks are the safest bet when you’re dealing with someone you don’t know, like a private seller, because the bank stands behind every payment. Some banks also offer cashier's checks to non-customers, but may charge higher fees.

When money orders are more practical

Money orders are your best bet if you’re moving smaller amounts of money and don’t have easy access to a bank. They’re much cheaper for purchases under $1,000, with lower fees and typically require only a small fee at the time of purchase—usually between $1 and $5. Money orders cost less than cashier’s checks, making them ideal for small transactions. That’s better than cashier’s checks which usually cost $10 to $15.

Money orders are accessible to more people than other payment methods. You can get them at post offices, grocery stores, convenience stores, and many retailers. This makes them perfect if you mostly use cash. If you need to pay more than $1,000, you may need to purchase multiple money orders, which can still be a cost-effective solution for larger payments.

Money orders protect your privacy better because they don’t show any of your banking details, such as your account number, enhancing security. Money orders are a paper form of payment, providing a tangible record. If you need to mail a payment, money orders are safer than personal checks that display your account and routing numbers right on them. They also create a paper trail, serving as proof of payment for both parties involved.

You might use a money order for rent payments, paying bills, or sending money securely without a bank account, especially for small transactions.

Certified checks: Where do they fit in?

A certified check is a guaranteed form of payment where the bank verifies your signature and ensures there are enough funds in your account to cover the check. This process makes certified checks less likely to be returned for insufficient funds, providing a secure option for both the payer and the recipient.

Certified checks fill the space between personal checks and cashier’s checks. The main difference from cashier’s checks is that the funding for a certified check comes from the account holder's own funds, which are set aside by the bank. In contrast, cashier’s checks are funded by the bank’s own funds. Certified checks cost a bit more than cashier’s checks, usually $15 to $20.

Certified checks work nicely when someone specifically asks for them and you need guaranteed funds. Just keep in mind they’re not quite as secure as cashier’s checks for high-value transactions.

Speed and processing time

Your choice of payment method can affect how quickly you get your money. Transaction amounts may also influence processing times, as larger amounts can be subject to additional verification. Knowing when funds become available helps you pick the right option that works best for you.

How long does a money order take to clear?

Money orders clear immediately when cashed at the issuing location. For example, you can cash a USPS money order at a post office within minutes. They process faster than personal checks when deposited into a bank account because they represent guaranteed funds.

The processing time changes based on where you cash them. Depositing a money order at a bank different from the issuer can take one to three business days. Retail locations might process it in 10-15 minutes, but charge higher fees than banks or post offices.

Cashier's check vs. money order: Clearing speed

Both cashier's checks and money orders clear faster than personal checks. These guaranteed payments usually make funds available by the next business day after deposit. Federal regulations require banks to release funds from cashier's checks by the next business day after they're deposited.

Reports have shown that both a USPS money order and a cashier's check make $200 available immediately after deposit, whereas a personal check keeps the funds locked up for a longer time. This quick access to funds makes money orders and cashier's checks excellent options when you need your money quickly.

Bank policies that affect processing time

Each bank's policies can change how long it takes to process your payment. Banks set cutoff times—any transaction after this adds an extra day to clearing. Deposits made on weekends don't start processing until the next business day.

Banks might hold your money longer in certain cases. They can place extended holds on deposits over $5,525, new accounts under 30 days, or accounts that recently went negative. The bank might also hold the entire amount if it thinks a check won't clear.

Note that quick access to your money doesn't always mean the bank has checked everything. If a cashier's check or money order turns out to be fake, the bank can take back the money even after making it available to you.

Cost, limits, and availability

Money plays a big role when people choose between different payment methods. You’ll make better decisions by knowing the limits, costs, and places to get these payment instruments. Financial institutions, such as your bank or credit union, are the primary issuers of cashier's checks and money orders, providing secure and guaranteed payment options.

Maximum limits: Cashier's check vs. money order

The maximum amount creates a key difference between these payment methods. Money orders come with a $1,000 limit per instrument. Most issuers stick to this limit, including the U.S. Postal Service and retail stores. For larger transactions, you may need to purchase multiple money orders, which can be a cost-effective alternative to cashier's checks when paying different bills or making several payments. Alternatively, you might consider using several cashier's checks if a single payment is not possible or if the total amount exceeds the money order limit.

Cashier’s checks work better for high-value transactions because they don’t have a maximum limit. This makes them perfect for big purchases like home down payments or buying vehicles when you need a single payment instrument.

Cost comparison: Which is cheaper?

Money orders are usually cheaper, often costing $1-$5:

• USPS charges $2.55-$3.60 based on the amount
• Walmart's fee is just $1.00
• Western Union's prices change by location

Cashier's checks often cost more money:

• Banks charge $5-$15 on average per check
• Wells Fargo's fee is $10 for each cashier's check
• Some account holders don't pay any fees at certain banks

Where to buy: Banks, post offices, and retailers

These payment methods differ substantially in availability. Banks or credit unions are the main institutions that offer cashier’s checks. Both banks and credit unions issue these secure payment methods, but a credit union may provide additional benefits or lower fees for its members when it offers cashier's checks. Money orders are available to more people, and you can buy them at:

• Post offices
• Grocery stores and supermarkets
• Convenience stores
• Check-cashing outlets
• Banks and credit unions
• Retail chains like Walmart

Do you need a bank account to get one?

This is a vital difference. You need a bank account at the issuing bank to get a cashier’s check. Typically, you must have a checking or savings account at that bank, and having a checking account can make the process easier for account holders. Some banks might help non-customers, but they charge extra fees for this service.

Money orders don’t need a bank account. You can buy them with cash at many places, which helps people without bank accounts. This easy access explains why money orders stay popular even with digital payment options available.

Security and fraud protection

Security must be your top priority when choosing between cashier’s checks and money orders, since fraudsters target both payment methods with complex schemes. Both cashier's checks and money orders are considered secure forms of payment and a guaranteed form, but you should always double-check their authenticity with the issuing institution to avoid scams.

When it comes to fraud, it's important to compare money order vs. cashier's check security. Both money orders and cashier's checks are commonly used to send money safely, but each has unique features and vulnerabilities. Money order cashier's checks are often compared for their security and reliability.

In summary, money orders and cashier's checks are both reliable options for secure transactions, but each carries its own risks. Always verify the legitimacy of these guaranteed payment methods before completing any transaction to protect yourself from potential fraud.

How secure are cashier's checks and money orders?

Cashier's checks come with more security features than money orders. These include watermarks, security threads, color-changing ink, and other protections. All the same, scammers now use advanced printing technologies to create convincing counterfeits of both payment types. Cashier's checks are bank-guaranteed and more secure, but neither option completely prevents fraud.

How to verify a cashier's check or money orders

To verify authenticity:

• Find the bank's official website and call their listed number—never use the phone number on the check
• The bank can verify it right away if you visit in person
• The bank should confirm the check number, issuance date, and amount
• Get into the details like watermarks, proper bank logo, and consistent formatting

Avoiding scams: Red flags to watch for

Watch out for these warning signs:

• Checks that exceed the agreed amount with requests to wire back extra money
• Foreign lottery wins or sudden windfall notices that come with checks
• Mystery shopper jobs that need you to wire money
• Unexpected checks from unknown people, particularly from overseas

What happens if one is lost or stolen?

Banks require these steps for lost cashier's checks:

• You must file a "declaration of loss" statement
• You need to buy an indemnity bond (insurance policy)
• The replacement check arrives after a 90-day waiting period

Bottom line

Your specific needs and circumstances will determine whether you should pick a cashier's check or a money order. Money orders work best for smaller transactions under $1,000 and cost just $1-$5. Cashier's checks are better suited for bigger purchases like real estate or vehicles with no amount limits, but they come with higher fees of $5-$15.

The way you can get these payment methods should shape your decision. Money orders are available to more people since you can buy them at post offices, retail stores, and convenience shops without needing a bank account. Cashier's checks require you to have a bank account, but give you boosted security features.

Both payment types clear more quickly than personal checks. You can usually access the funds by the next business day after the deposit. Your bank's policies about cutoff times and account status might affect how fast the processing happens, whichever option you pick.

Personal checks aren't generally as safe as these payment methods, but scammers can still target both options. You should check if they're real when someone pays you with either type. Watch out for scams that involve getting paid too much or requests to wire back some money.

Look at your transaction size, whether you have a bank account, how secure you need the payment to be, and how quickly you need it processed. Money orders give you an easy and cheap way to pay for small things if you don't have a bank account. Cashier's checks might cost more, but they are your best bet for major purchases where guaranteed payment is vital. These differences will help you pick what works best for your money situation.

Frequently asked questions

Which payment method is more secure: A money order or a cashier's check?

Cashier's checks generally offer more security features, including watermarks and color-changing ink. However, both can be targeted by fraud. Always verify the authenticity of either payment method with the issuing institution.

What are the potential drawbacks of using a cashier's check?

Cashier's checks typically come with higher fees, usually between $5-$15, making them less practical for smaller transactions. They also usually require a bank account, which can be inconvenient for those without one.

Do money orders clear faster than personal checks?

Yes, money orders generally clear faster than personal checks. When deposited, funds from money orders are often available by the next business day, similar to cashier's checks.

What's the main difference between cashier's checks and money orders in terms of transaction limits?

Cashier's checks usually have no maximum limit, making them ideal for large purchases. Money orders, on the other hand, typically have a $1,000 cap.

Where can I purchase a money order if I don't have a bank account?

Money orders are widely accessible and can be purchased without a bank account at various locations, including post offices, grocery stores, convenience stores, check-cashing outlets, and retail chains like Walmart.