The Differences Between Money Orders, Bank Checks, and Cashier's Checks

• The Differences Between a Money Order, a Bank Check, and a Cashier's Check

  

  A money order is a document, similar to a check, used for making a payment. Since they are prepaid, the funds are considered guaranteed forms of payment (though are sometimes used in scams, so be sure to be careful when using money orders.)

  Money orders are not as common as they used to be due to the switch to automatic transfer, and online payment services such as PayPal.

  A cashier’s check, also called a bank check, is another form of payment since they are issued and guaranteed by banks. However, cashier’s checks have a higher limit than money orders, so they can be used for bigger purchases, like the down payment on a house. But banks may place a hold on amounts higher than $5,000.

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   Purchasing a Money Order

  

  You can purchase a money order from your bank or credit union. You can also purchase a money order through the post office or businesses that offer them. Money orders can be purchased at grocery stores, banks and credit unions, convenience stores, and U.S. post offices.

  When you purchase a money order, the bank will either accept cash or directly debit your account. Most banks charge a fee for money orders, though they may waive the fee if you have certain types of accounts with them.

  When purchasing a money order, you’ll need the amount of the money order and the name of the payee. Avoid making the money order out to cash, and always keep your receipt. Also, the maximum amount for money orders is $1,000.

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   When to Use a Money Order

  

  A money order is ideal to use when you know you are going to make a large purchase and you do not want to carry cash. This would be a time when you would use a money order is when your debit cardor personal check would not be accepted, and the amount is too large to carry cash. If you are purchasing a car or making a large purchase through the classifieds, you can purchase multiple money orders if the amount is more than the limit put in place by your bank.

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   Getting a Cashier’s Check or Bank Check

  

  You can get a cashier’s check at your bank or credit union, and the charge will usually be around $8. You will need to present the following to get a cashier’s check: a valid ID, available funds in your account, as well as the amount of the check, who it will be payable to, and anything you’d like to include in the memo portion of the cashier’s check.

  Once you get the cashier’s check, the funds will be removed from your account and transferred into the bank’s account. (That’s how they guarantee payment.) Once the check is cashed or deposited by the payee, then the funds will be removed from the bank’s account.

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   When to Use a Cashier’s Check or Bank Check

  

  You should use a cashier’s or official check when you are making a large purchase and using cash would not be practical. For example, many people use a cashier’s check when making a down payment on a house, since the amount is too large to carry cash.​

  Many banks will only issue a cashier’s check to a customer. You can use this type of check to try to avoid a hold on funds you are depositing. This is especially true if you want to avoid a hold on out-of-state checks. Traditionally, cashier’s checks are considered a safer payment method than a personal check, since the funds are guaranteed. They are also safer for you since they don’t contain your account number.

  
  

• 06

   Accepting a Money Order, Cashier’s Check, or Bank Check

  

  You can accept a money order or a bank check when you are selling a large item such as a car to a private seller. This will protect you because the funds are guaranteed as long as the money order or bank check is legitimate and there are no stop payments put on the check. 

  Also keep in mind that once you purchase a cashier’s check or money order, it is very difficult to cancel.

• 07

   Avoid Scams

  

  There are a variety of scams circulating that use money orders or cashier’s checks. The scams involve giving you a check to deposit into your checking account, then instructing you to withdraw the funds and send a portion back to the sender.

  The original money order or cashier’s check doesn’t clear, then you are left out of the money you sent back, as well as any money you may have spent from the original amount since you thought it was yours to keep.

  Remember, if something doesn’t feel right about a situation or sounds too good to be true, it could be a scam.

What Is the Difference Between Credit Card and a Debit Card?

Have you ever been confused about the difference between a credit and debit card? It’s easy to see why. Debit cards and credit cards are accepted at many of the same places. They also both offer convenience and eliminate the need to carry cash. They even look similar.

The fundamental difference between a debit card and a credit card account is where the cards pull the money. A debit card takes it from your banking account and a credit card charges it to your line of credit.

What Is a Debit Card?

Debit cards offer the convenience of a credit card but work in a different way. Debit cards draw money directly from your checking account when you make the purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their bank and it is transferred to the merchant's account. It can take a few days for this to happen, and the hold may drop off before the transaction goes through.

That’s why it’s important to keep a running balance of your checking account to make sure you do not accidentally overdraw your account.

You will have a PIN to use with your debit card at stores or ATMs. However, you can also use your debit card without a PIN at most merchants. You will just sign the receipt like you would with a credit card. Below are some other facts regarding debit cards.

• A debit card is tied directly to your checking account.
• It can be used where a credit card can be used.
• Generally, you will use your PIN to complete the transactions.

What Is a Credit Card?

A credit card is a card that allows you to borrow money against a line of credit, otherwise known as the card’s credit limit. You use the card to make basic transactions, which are then reflected on your bill.

Worth noting: you are charged interest on your purchases, though there is no interest charged if you do not carry your balance over from month to month. Credit cards have high interest rates, and your credit card balance and payment history can affect your credit score. Below are other facts about credit cards:

• A credit card is a line of credit you can access with your card.
• Generally, you must sign on these purchases (exceptions may be at the gas pump or for small amounts at a drive-through window).
• You will pay interest on the purchases made if not paid off in 30 days.

Debit Cards vs. Credit Cards

It used to be commonly thought that you needed a credit card to complete certain transactions, such as rent a car or to purchase items online, or that it was safer and easier to travel with a credit card rather than carrying cash or using a checkbook.

Some also argue that a credit card offers additional insurance on purchases and makes it easier to request a refund or a return. You should carefully read the disclosure information for your credit card to understand the benefit.

Debit cards offer the same convenience without requiring you to borrow the money to complete the transactions, though debit cards don’t always provide the same consumer protections of credit cards.

It can be difficult to determine when to use a credit card or a debit card. Be sure to do your research to determine the right option for you.

Choosing the Best Card for the Situation

If you have spending issues, it is a better option to use your debit card whenever possible, because it will prevent you from accidentally falling into the credit carddebt.

It also depends on the purchase. Some rental car agencies and hotels may still request a credit card over a debit card because they want to have a card where they can bill you for damages to their property.

Others may argue that using a credit card is the better option to take advantage of credit card reward programs. This works if you pay off the balance in full each month. However, if you do not, whatever you end up saving in rewards you will pay in interest. Other facts to consider when choosing whether to use a credit or debit card:

• Consider using credit cards for hotel reservations and car rentals.
• For daily purchases, your debit card can help you stick to your budget.
• If you are going to take advantage of rewards, be sure to pay off the balance in full each month.

Protecting Your Credit

Both a credit and debit card have similar risks when it comes to identity theft. If your credit or debit card information has been compromised, you will need to contact your bank immediately. You should also take additional steps and monitor your credit report to make sure that your identity was not stolen.

Additionally, it is important to check your statements each month to make sure you can identify all charges. That way, you can get any fraudulent charges refunded immediately. Also be sure to report it immediately, since banks limit the length of time that you can report a fraudulent charge on the account.