When you need to make a secure payment, both certified checks and money orders are safer than using cash. But each has its own pros and cons, and one might be better suited to your situation than the other.
So, what’s the difference between a certified check vs money order, and how do you know which one to use? We’ll break down the key factors to consider – cost, security, availability, and transaction limits – so you can make the best choice.
What are certified checks and money orders?
Both certified checks and money orders are reliable ways to make payments, but there are some key differences.
Certified check
A certified check is a paper check that’s guaranteed by a bank. The bank verifies that the payer has enough money in their account to cover the check, and then the bank sets those funds aside so the check will clear.
You can get a certified check from your bank or credit union, usually at a branch where you have an account.
Money order
A money order is a prepaid order you can use to pay a specific amount to a person or company. You buy a money order with cash or another form of payment, and then the recipient can cash it or deposit it.
You can buy money orders at post offices, retail stores, banks, and credit unions.
Key Differences: A Side-by-Side Comparison
While both certified checks and money orders guarantee funds, they aren’t identical. Here’s a quick rundown of the main differences:
Cost
- Certified Check: A certified check will likely cost you more, somewhere in the range of $5 to $10.
- Money Order: Usually, a money order is the cheaper option, with fees ranging from $1 to $5, depending on where you get it and how much the money order is for. For example, a money order from Walmart might cost you around a dollar. The U.S. Postal Service charges fees from $2.10 to $3.
Availability
- Certified Check: You’ll generally have to go to a bank or credit union where you have an account.
- Money Order: You can buy money orders at post offices, retail stores, and banks.
Security
- Certified Check: Because the bank guarantees the money is there and often fills out the payee’s name, certified checks are considered more secure.
- Money Order: Still pretty safe, but there’s a greater chance a crook could cash a money order if it’s lost or stolen before you fill it out.
Transaction Limits
- Certified Check: You can usually write a certified check for any amount of money.
- Money Order: Money orders usually have lower limits, with $1,000 being a common maximum.
When should I use a certified check?
Certified checks are best for large transactions, when the recipient needs reassurance that the funds are there. You might want to use a certified check in the following situations:
- Large Purchases: Certified checks are ideal for major purchases like a car, jewelry, or real estate. Imagine buying a used car for $5,000. A certified check guarantees the seller that you have the money.
- Guaranteed Funds: Sometimes, the person you’re paying needs to know the money is definitely available. For example, closing costs on a house often require guaranteed funds.
- Transactions with Strangers: If you’re buying or selling something to someone you don’t know, a certified check offers a secure payment method. For example, if you’re selling furniture online, a certified check can help reassure you that you’ll receive the payment.
When to use a money order
Money orders are best for smaller transactions where the cost of getting a certified check doesn’t make sense. For example, if you’re paying a $500 deposit on an apartment, a money order is a good choice.
They’re also useful when you need to pay someone but don’t want to share your bank account details. Landlords, for example, often accept rent payments via money order.
Finally, some services let you send money internationally using money orders. Just make sure the service you choose is reputable and offers tracking.
How to protect yourself from fraud
Here’s how to protect yourself when using certified checks and money orders:
Certified Checks
- Before leaving the bank, double-check that all the information on the check is correct.
- Make sure the bank that issued the check is legitimate.
Money Orders
- Keep your receipt as proof you purchased the money order.
- Fill out the money order completely and legibly to prevent fraud.
- Consider sending the money order using a service that offers tracking.
If you think you’ve been the victim of fraud, contact the police and consider taking legal action.
Frequently Asked Questions
What is the difference between a cashier’s check and a certified check?
While both offer a guarantee of funds, a cashier’s check is drawn from the bank’s own funds and signed by a bank teller, whereas a certified check is your personal check that the bank has verified and stamped, guaranteeing sufficient funds are available in your account.
Is a money order the same as a certified check?
No, a money order and a certified check are not the same. A money order is a pre-paid payment order, meaning you pay for it upfront, while a certified check is your personal check that the bank guarantees has sufficient funds. Money orders are typically used for smaller amounts and can be purchased at various locations, not just banks.
How much does a certified check cost?
The cost of a certified check varies depending on the bank or credit union. Typically, you can expect to pay anywhere from $5 to $20 for a certified check. Contact your financial institution to inquire about their specific fees.
What is better: money order or certified check?
The “better” option depends on the situation. For smaller amounts and convenience, a money order might be preferable. For larger transactions where a guaranteed check from your own account is needed, a certified check is usually the way to go. Consider the amount, security requirements, and where the payment needs to be made.
Putting It All Together
Certified checks and money orders are both reliable ways to send money, but they work differently. Certified checks draw on your bank account and are verified by the bank, while money orders are prepaid and issued by various institutions.
The best choice depends on what you need. Consider the costs, how secure you need the payment to be, and the amount you’re sending. Weigh the good and bad points of each option before you decide.
And don’t forget about other ways to pay! Depending on the situation, peer-to-peer transfers might be an even better fit.