There are so many different financial products out there. Sometimes it can feel overwhelming to learn what each of them is and how they work. Luckily, CreditNinja offers the information and support for when you need money. We always want to make sure that you make the right financial decision based on your situation. If you’re curious about a money order vs. cashier’s check, then read on to learn more.
You’ve no doubt heard of paper checks. They’ve been around for what seems like forever. Yet, nowadays, it seems like no one even uses them anymore. Now we have online banking, mobile payments, credit and check cards, and more. So, with all the new tools out there, it makes sense that paper checks have taken a back seat.
But there are other similar financial solutions that are still common today. For example, money orders and cashier’s checks still have a role in our financial lives. So it’s important to know what they are, how they work, and when it’s appropriate and necessary to use them to send or receive quick cash.
What Is a Cashier’s Check?
A cashier’s check is similar to a regular paper check that you may be familiar with. The significant difference is that an average check associated with your bank account is drawn from your checking account. A cashier’s check, on the other hand, pulls the money from the bank’s funds. A teller or cashier will sign a cashier’s check at the bank, and the bank itself guarantees the funds.
At this point, you may be wondering, “why to use a cashier’s check instead of a debit card or regular check?” Well, that’s a great question! There are a couple of reasons you might choose to go with a cashier’s check.
A cashier’s check is generally best for substantial purchases. Certain large purchases may not allow you to use a debit or credit card, like a home or vehicle. In these instances, it makes more sense to use a cashier’s check. Cashier’s checks also provide an added layer of security, making them less susceptible to fraud and theft. For example, many cashier’s checks will have security watermarks and require bank employee signatures. These extra security measures make them more secure than a regular paper check.
How Does a Cashier’s Check Work?
Now that you know what a cashier’s check is and what you might use it for, it’s time to review how to get one. The first step will be to collect the appropriate information that you’ll need for the check. Next, find out precisely how much the check should be for and the recipient’s full name.
The next step will be to reach out to your bank. If you don’t have a bank, there may be certain branches or even credit unions that can still help you. If you do have a bank, you can sometimes request a cashier’s check online or over the phone. But the fastest way to get the check would be to visit a branch of your bank in person.
Once you request the check, you’ll need to pay the total amount. If you have a bank account with them, the funds will likely be withdrawn from that account. So be sure that you have enough funds in your account to cover the entire check plus any applicable fees. If you don’t have an account with the bank providing the check, you’ll likely have to pay them in cash for the check.
The last step would be to request a receipt for the transaction. It’s always good to have proof of the transaction. Having a receipt could also help you to track the check and payment.
What Is a Money Order?
While a money order does share some similarities to a personal check and a cashier’s check, there are a few distinct differences.
A money order is a type of paper payment, just like a cashier’s check and a personal check. The most significant distinction is that a customer purchases a money order ahead of time for the exact amount they’re sending. Because the sender pays for the amount before sending it, the amount they’re sending is guaranteed and can’t bounce like a personal check.
A money order is a very secure way of sending money to someone. Just like with a cashier’s check, you’ll need to provide the name of the person receiving it and the exact amount. However, because you pay for the money order upfront and it includes the specific amount and recipient, they tend to be safer than personal checks and some forms of digital payments.
Many people choose to use a money order because they don’t have a bank account or any way of sending a large amount of cash to someone else. If you aren’t a part of a bank or credit union, a money order may be a good option for safely sending money that you owe.
How Does a Money Order Work?
Getting a money order is as simple as finding an establishment that offers them and purchasing one. You can buy a money order through the US Postal Service, certain retail banks, specific retailers like grocery stores, convenience stores, or even pharmacies, as well as check cashing and payday establishments.
Money orders will also have a fee that you’ll need to pay for using the service. This fee can be anywhere from a dollar up to a few dollars, depending on the specific establishment. For instance, the USPS charges $1.30 for money orders under $500 and $1.75 for money orders over $500.
Many places will also put limits on the amount you can send using a money order. For example, the USPS won’t allow money orders over $1,000. So keep this in mind when considering a money order.
How To Get The Money Into Your Bank Account
Now that you’re an expert on sending money orders and cashier’s checks, you may be wondering what to do if you’re the recipient of one. Luckily, this is the easy part.
If you have a checking or savings account with a bank or credit union, it will be very easy to deposit a cashier’s check or money order.
You can likely use the same process that you would for a traditional paper check or a paycheck from your employer. This means you can visit a local branch of your bank and deposit the money into your checking account or savings account. Many banks will also allow you to deposit funds into your checking account through a mobile deposit. This would probably require online or mobile banking.
Cashier’s Check vs. Money order: The Bottom Line
If you’re debating a cashier’s check vs. money order, there are a few things that may help you decide. First, make sure to consider the reason for the payment, as cashier’s checks and money orders are often sent for different reasons.
First, whether or not you have a bank account will play a large part in your choice. If you do have a bank account and you need a money order or cashier’s check, then you may opt for a cashier’s check from your bank.
If you don’t have a bank account, but you need cashier’s checks or money orders, then you only have a couple of options
- Find a credit union or bank that offers them to non-members
- Use the USPS, check cashing establishments, or convenience stores to order one.
Both cashier’s checks and money orders offer a safe and secure way to send and receive money. While a cashier’s check is usually used for a large purchase, money orders are often used to send money to people when the sender doesn’t have a bank. Often, a money order is better for sending money to an individual, as many companies may not accept them for large purchases.
Choosing between cashier’s checks and money orders will depend on your specific situation and which one is available to you as the sender.