When looking to make a secure purchase, for both the buyer and seller, there are two common payment methods used to ensure that a transaction can be conducted securely-money orders and cashier’s checks. These two payment methods are prepaid checks that allow you make payments without using a debit card, a credit card, a personal check, or cash. However, they differ on when to use them, their cost, and where they can be purchased.
Money OrderMoney orders are one of the most convenient ways to pay the full amount up front when using cash isn't practical. When a money order is purchased, the face value is paid in full by the purchaser to the entity issuing the money order. This ensures that the payee is confident that the funds have been verified for the amount specified and it will not bounce. An important thing to note is the “Pay to” line must be filled in with the recipient’s name or else anyone can cash the money order.
When compared to a cashier’s check, money orders are better for smaller purchases, as they are typically limited to amounts up to $10,000. Generally, money orders are used for bills, to prevent bounced checks, or when funds need to be sent through the mail.
Cashier’s CheckWhen a cashier’s check is purchased, the purchaser pays a financial institution the face value of the check. The funds are then withdrawn from the customer’s account and the financial institution signs the check, which guarantees that the funds are available, and the check will not bounce. When the check is issued, the intended recipient’s name is filled out by the financial institution so it can only be cashed by that person or business.
This translates to the cashier’s checks being a more secure option of the two, since they require the purchaser to meet additional sets of criteria in order to purchase. This increase in security comes with a tradeoff of having a higher cost, typically starting at $10. Additionally, cashier’s checks are only offered by financial institutions where you are a member or have an account with.
Cashier’s checks are better for larger purchases and do not usually have a limit to the amount they can be written for. Typically, they are used for purchases over $10,000, or transactions that require more security, or when using cash is not safe or feasible.
To Sum It Up:
Money orders and cashier’s checks are both great ways to conduct secure transactions. While money orders are more convenient and cost-effective for smaller purchases, cashier’s checks are more secure for larger purchases at a slightly higher cost. Although both payment methods are widely accepted, that does not mean that all businesses and individuals will accept them. Always verify that your preferred form of payment will be accepted before you attempt to use it.