Money orders and cashier’s checks both guarantee payment, but the main difference is that a cashier’s check uses the bank’s funds and is signed by the bank, while a money order can be issued by various sources. Cashier’s checks are generally more expensive and require a bank account, while money orders can be purchased from non-bank entities. Verification and fraud prevention are important for both options.
Understanding the similarities and differences between a money order and a cashier’s check is very important when conducting business. The main difference between a money order and a cashier’s check is that a cashier’s check uses the bank’s funds and is signed by the bank or teller, while a money order can be issued by a variety of sources, such as a bank , grocery store, the United States Post Office and the Western Union of the United States. Although both a money order and a cashier’s check are insured, a cashier’s check generally costs more to purchase. The main similarity between a money order and a cashier’s check is that the funds are guaranteed.
Both a money order and a cashier’s check are preferable to a personal check because both guarantee that there will be payment for the products or goods being shipped or purchased. With a money order, the payment is issued by one of many sources, such as a bank or post office. As a result, the person waiting for the money is sure that he will receive it. With a cashier’s check, the bank assumes responsibility for paying the person selling the goods, but this usually happens after the bank takes the money from the buyer’s bank account. The exchange usually happens instantly, so the bank removes the money from the buyer’s account at the same time it sends money to the seller.
Generally, a money order and cashier’s check cost money to purchase. In most cases, the fee associated with a cashier’s check is higher than a money order, unless a bank specifically has lower fees for its customers. Also, a person must have a bank account with the bank that issues the cashier’s check. Therefore, a person without a bank account must use a money order to make a payment, since it can be issued by a non-bank entity.
Usually, the issuing entity can verify both a money order and a cashier’s check without expending a lot of time or effort. Verifying the check number and amount with the issuing entity is a great way to prevent fraud. Also, a money order becomes more tedious if the purchase amount is large. In those cases, photo identification may be required, making a cashier’s check a better option. In either case, either a money order or a cashier’s check is a better option for the seller than a personal check because both guarantee payment of the funds.
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