What are the differences between personal checks, money orders, and cashier’s checks – and when do you use them?
Personal checks, money orders, and cashier’s checks – what are they, and when is the time to use them?
Writing checks isn’t as popular as time goes on and technology advances. Digital wallets allow you to make payments instantly, and services like Zelle let you send money to friends and family without having to write a check or visit the ATM.
However, writing a paper check has its place – but when is writing a check is right for you? Check out your paper check options, and how to best use them.
Personal Checks
A personal check is a standard kind of check in which you might be familiar – it includes a payee, amount, and requires a signature on the front, as well an endorsem*nt signature on the reverse. Financial institutions usually give these to you after you open a bank account, and you can re-order by contacting your bank, or online.
When you write a check, you are agreeing to pay a specific amount. The check pulls funds out of your checking account – so if there’s not enough funds in account for the amount of the check, that’s called a bounced check, or a check with insufficient funds. These checks cannot be cashed since there are insufficient funds, and it’s likely your account will be charged with an NSF (nonsufficient funds) fee, so it’s important to make sure there is enough money in the account when writing any checks.
Although less popular now than before, checks have a variety of uses. If you’re making payments that would benefit from a physical paper trail, such as bills or rent, checks allow you to keep a copy of exactly whom you paid. It’s important to keep a close eye on your checks, to protect yourself from any fraud.
Cashier’s Checks
A cashier’s check is similar to a personal check: it’s a piece of paper that stands for money in an account. The main difference is the bank writes a cashier’s check. The bank guarantees the money on the check is available, which is why you can’t write a cashier’s check for yourself
Getting a cashier’s check requires a little more work than a personal check – you need the amount and recipient for the check. Once you have that information, you can visit a bank and speak with a teller, who will give you a receipt for your records. It’s important to note that some banks charge a fee for a cashier’s check.
Cashier’s checks are especially useful if you’re making a large payment, such as the down payment on a vehicle, or the sale of a house.
Money Orders
Just like personal and cashier’s checks, money orders are secure forms of payment, representing an amount of money. Unlike checks, a money order does not pull funds directly from your account. You can use money orders in instances where you may not want to use a personal check, which includes personal information like address, T/R number and account number.
Money orders work opposite of checks – you exchange money (typically cash) for a piece of paper that represents that specific amount of money. You can purchase a money order from several places besides the bank, such as post offices, convenience stores, grocery stores, and more. Just like checks, they offer a paper trail to prove any payments.
If you’re making a one-time purchase, and want physical proof of the exact amount, money orders are a secure option. Plus, money orders do not contain your personal information, such as your account number. Some bank accounts come with free money orders, such as our MaxMoney® checking account.
There are many different ways to pay for things – cash, credit or debit card, checks, and digital payments – but there are situations where you need a paper trail with physical payment. As always, contact us if you have any questions – we’re here to help make banking easier for you.
