Bank Check vs. Money Order

There are numerous options when it comes to payment for goods or services, two of which are a bank check and a money order. While both are widely accepted, there are some key differences between the two that consumers should be aware of.

Identification

A bank check is a signed document generally treated like cash because the funds indicated on the document are taken from the check writer's checking account with a financial institution. A money order is also a signed document used like cash. However, this form of payment is considered guaranteed because the funds for the document were exchanged at the time of the money order purchase.

Process

Bank checks undergo a certain process before funds are released. The check goes from the financial institution of the person or business to which it was written to the account holder's institution; if the money is not available, it is sent back to the original institution as a bounced check. In comparison, a money order is an instant exchange of funds because the money for the document was exchanged and released at the time of purchase.

Considerations

It is against the law to write bad checks and your local state's attorney's office can pursue legal action against you that, in some instances, can include jail time if you are a repeat offender. Money orders come in handy for those that have a hard time maintaining a checking account.

References

• Financial Web: Bank Checks Versus Personal Checks
• Investor Words: Money Order Definition