If you need to pay someone and don’t want to use cash or write a personal check, you could use a money order or cashier’s check instead. Both are types of guaranteed payments, but they differ in terms of where you can buy them, what they cost and when it makes sense to use one over the other. 

Cashier’s Check Defined

A cashier’s check is a type of official check that’s issued by a bank. It’s not to be confused with a certified check, which is also a bank-issued check.

When you purchase a cashier’s check, the bank takes the money from your checking or savings account and puts it in its own account. The bank then writes out a check to the person or business you need to pay. You’ll typically pay a fee for a cashier’s check to the bank, with the average fee at the nation’s largest banks hovering around $10. 

The upside of using a cashier’s check to pay someone (or receive a payment) in place of a personal check or cash is that it’s secure. Because the bank takes the money directly from your account and puts it into its own, the check is guaranteed not to bounce. That means whomever you need to pay is guaranteed to get the money. And you don’t have to worry about any overdraft or non-sufficient funds (NSF) fees, which are charged when you don’t have enough money in your account to cover a check.

Cashier’s checks aren’t completely foolproof, however, and fraudulent cashier’s checks can feature in financial scams. A scammer may present you with what looks like an official cashier’s check, which you deposit into your account. Weeks later, however, your bank may discover that the check is a fake. If someone you don’t know very well tries to pay you with a cashier’s check, it’s a good idea to contact the bank whose name is on the check to make sure it’s authentic before trying to deposit or cash it. 

What’s a Money Order?

Money orders are also secure payments. But instead of buying them at a bank, you can get them from the U.S. Postal Service, convenience stores, drug stores, grocery stores and check-cashing companies. These same places can also cash a money order for you if you’ve received one, or you can deposit a money order at your bank.

When you purchase a money order, you have to pay for it with cash, a debit card or traveler’s checks; you generally can’t use a credit card or write a personal check. If you use a credit card, it could be treated like a cash advance. Like cashier’s checks, you’ll pay a fee for a money order, but they’re inexpensive. Depending on where you buy a money order from – and how much it is for – the fee may be less than $1 or go up to $5. 

One advantage money orders have over cashier’s checks is that they’re usually easier to replace if they’re lost or stolen. With a cashier’s check, you must request a new check from the bank and, in most cases, purchase an indemnity bond from an insurance company. This bond protects the bank if you lose the cashier’s check a second time. Once you file your request for a new check, it can take anywhere from 30 to 90 days for it to be issued.

Replacing a lost or stolen money order is often as simple as returning with your receipt to the place where it was purchased and asking for a replacement or refund. The money-order issuer may charge you a fee to replace it, but you can get it right away, instead of having to wait months for a cashier’s check to be reissued. 

When to Use a Cashier’s Check vs. a Money Order

Money orders are generally easier to buy, but cashier’s checks are more secure. So which one should you use and when? 

The safety factor makes cashier’s checks the better choice if you need to make a large payment, say, for a car or boat. In some cases a cashier’s check may be your only payment option. If you’re buying a home, for example, the lender may require you to get a cashier’s check to pay what you owe during the closing. 

Money orders are less expensive, making them better suited for a smaller payment or when you can’t write a personal check. For instance, you may use a money order to pay your rent or to send a few hundred dollars to a friend who’s short on cash.

The Bottom Line

Money orders and cashier’s checks can be a convenient way to pay someone or to receive money. If you’re planning to purchase either one, remember to check the fees involved and whether the issuer puts any limits on the amount of money you can get them for. Most important, keep your receipt or statement showing when the money order or cashier’s check was purchased, in case it is lost, stolen or damaged.