Cashier's Check vs. Money Order: An Overview

Cashier's checks and money orders are considered to be safer forms of payment compared to personal checks, 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. You can use a money order or cashier’s check instead if you have to pay someone and you don’t want to use cash or write a personal check.

How a Cashier's Check Works

The bank takes the money from your checking or savings account and puts it in its own account when you purchase a cashier's check. The bank then writes out a check to the person or business you want to pay. You’ll typically pay a fee to the bank 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 to receive payment) in place of a personal check or cash is that it's secure. The bank takes the money directly from your account and puts it into its own, so the check is guaranteed not to bounce. Whoever you want to pay is guaranteed to receive the money. And you don’t have to worry about any overdraft or non-sufficient funds (NSF) fees that can be charged when you don’t have enough money in your account to cover a check.

Cashier's Checks vs. Certified Checks

A cashier’s check is an official check that’s issued by a bank. It’s not the same as a certified check, which is drawn on a depositor's checking account after the bank has certified and put a hold on sufficient funds to pay the check's amount.

Another key difference is that a bank representative will sign a cashier's check because the funds are technically drawn from the bank's own account whereas the bank certifies the customer's signature on a certified check is genuine.

How a Money Order Works

Money orders are also a safer form of payment compared to personal checks. You can buy money orders at a bank, the U.S. Postal Service, convenience stores, drug stores, grocery stores and check-cashing companies. These places generally will also cash a money order they've issued, or you can deposit a money order into your bank account.

You must pay for a money order with cash, a debit card or traveler’s checks when you purchase one. You generally can’t use a credit card or write a personal check, and the transaction could be treated as a cash advance if you are able to use a credit card. Like cashier’s checks, you’ll pay a fee for a money order, but it's usually inexpensive. The fee may be less than $1 or as much as $5 depending on where you buy a money order and how much it's for.

Replacing Money Orders and Cashier's Checks

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

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 waiting months for a cashier’s check to be reissued.

When to Use Which

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

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

Money orders are less expensive, making them more suitable for smaller payments or when writing a personal check isn't an option. You might want to use a money order to pay 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. Remember to check the fees involved and whether the issuer puts any limits on dollar amounts if you’re planning to purchase either one. Most importantly, keep your receipt or statement showing when the money order or cashier’s check was purchased in case it's lost, stolen, or damaged.