There are times when a personal check doesn’t cut it. You may have an important expense, such as a used-car purchase or a rent deposit, but the person you’re paying won’t accept that little piece of paper from your checkbook.
The recipient may ask instead for some form of guaranteed payment. If you’re not keen on carrying around large amounts of cash, your other options include a money order or a cashier’s check.
Many businesses won’t issue a money order above $1,000. So if you have to write a check for more than a grand — say, $5,000 to buy a used car — a cashier’s check may be your best option.
Cashier’s checks can be written for less than $1,000, but they usually cost more than money orders. Money orders can sell for less than $2, while cashier’s checks in any amount often cost around $10.
Wal-Mart has some of the cheapest prices for money orders, charging 70 cents for amounts up to $1,000. The U.S. Postal Service charges between $1.20 and $1.60, depending on the amount. Banks often charge around $5.
Though cashier’s checks cost more, some banks and credit unions waive the fees for customers with premium accounts. It’s worth asking your financial institution if you qualify.
The amount of the check may be the most important factor when choosing between a money order and cashier’s check. But there are other differences between them.
You can buy money orders at post offices, 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. You could ask your recipient if you could send money online instead.
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 receiver’s name. If the purchaser loses the money order before it’s filled in, 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.
Since it already has the payee’s name typed on it, a cashier’s check provides an extra level of protection for both the sender and the receiver. And an official check drawn up by a financial institution may seem more credible to a receiver than a money order from Chucky’s 24-Hour Market. But either option is a good way to offer guaranteed payment.