Money Order Vs. Certified Bank Check

Money orders are still common today, while certified checks have faded in popularity.

Both money orders and certified bank checks are used to pay others officially for products or services. Overall, the money order is a more common, general type of payment method and the certified check is a more limited instrument that has faded in use over time. A certified check should not be confused with a cashier's check, which is issued by the bank itself using its own funds. Both money orders and certified checks use the money of the account holder.

Money Order

A money order is a simple instrument that indicates someone must be paid a certain amount of money. Money orders must be paid for by the person creating it, so the certificate itself is prepaid, guaranteeing that the person it is sent to will be paid. This method is often used when those involved in a transaction do not want to deal with personal checks.

Certified Bank Check

Certified bank checks are similar to personal checks, but they are directly authorized by a bank. The person paying the check goes into a bank and asks for a certified check. The bank creates a specific certificate and in essence "reserves" the money from the person's checking account, making sure enough money is there to pay the check and ensuring that it will not be used for anything else until the check is cashed. The bank typically stamps the certified check with a special seal so the amount cannot be changed.

Institutions

When it comes to availability, money orders are easier to get. A certified check must be created by the bank that the person has an account with. A money order, on the other hand, is paid for immediately and can be made by a variety of institutions. In the United States, money orders are typically ordered at the post office. This often makes it easier for people to create and purchase money orders.

Costs

Both money orders and certified bank checks only cost a few dollars. However, money orders are typically cheaper in small amounts. A money order up to several hundred dollars will only cost about a dollar to create. A certified check from a bank will cost several dollars, no matter how much it is for. Online business practices and other certification methods have made it very uncommon for banks to issue certified checks, so costs in some banks may be higher due to the rarity of the process.

Dependability

Money orders and certified banks checks are both more dependable than a personal check. The money order is typically made out to a certain person and is already paid. The certified check is authorized by the bank itself and the funds are set aside. Certified checks, however, may still be able to be cancelled if something goes wrong.

References

• Banking Questions: Certified Check Vs. Cashier's Check
• PC Guide: Money Orders and Certified Checks
• SuperPages: What is a Certified Check?