Money Order vs Certified Cheque: What’s the Difference?

The main difference between money orders and certified cheques is that a money order requires you to provide the cash for it upfront, while a certified cheque only places a hold on the funds in your account.

Money Order Certified Cheque
Transaction Limit $999.99 None 
Time to deposit Money is available immediately when cashed 1- 3 business days
Expiration date Never expires Never expires
Fee $7.50 – $10.00 $10 – $25
Do you need a bank account to request one? No Yes

What is a Money Order?

A money order is a physical document that serves as a secure form of payment.

It’s certified by the issuer, which means the recipient is guaranteed to receive the funds when they cash it.

You can purchase a money order at Canada Post, at one of the big banks, and some alternative lenders. 

To complete a money order, you must print your name and address and the recipient’s name on the front side of the document.

You’ll also need to add your signature.

You must pay the face value of the money order (the amount you’re sending) to the issuing organization plus a service fee. 

Once you’ve filled out the necessary details, you’ll receive a confirmation receipt with a tracking number, which can help you confirm when the money order is cashed.

To claim the funds, the recipient can deposit the money order at any financial instiatution

Below are some of the benefits and drawbacks of money orders and when it’s ideal to use one.

Benefits

  • It doesn’t contain sensitive banking details – only your name and address
  • The recipient is guaranteed to collect payment
  • Only the intended recipient can cash it, which significantly diminishes the risk of theft 

Drawbacks

  • You must pay a fee to purchase one
  • The maximum amount of money you can send is $999.99 per document

When Should I Use a Money Order?

A money order is a more secure and reliable payment method than cash or a personal cheque, especially if you’re sending it through the mail.

By opting for a money order, you have assurances that only the recipient listed on the document can cash it as the payment is guaranteed.

In some instances, the seller may insist on a money order to complete a sale, in which case you have no choice but to use one. 

If you lack a bank account or credit card, a money order can serve as a viable alternative to ensure you can conduct a wide range of purchases.

Don’t Forget!

You can only purchase a money order using cash or a debit card, not a credit card.

Banker signing certified cheque

What is a Certified Cheque?

A certified cheque is where the bank has verified that the payer has sufficient funds in their account to cover it.

In other words, when the payee deposits the cheque, the money will clear without a hitch.

When a financial institution issues a certified cheque for you, they earmark the funds to guarantee payment for the recipient.

As a result, you’re barred from using these funds for any other transaction. 

You can obtain a certified cheque only in person at a bank or other financial institution. 

The teller will verify that you have enough money in your chequing account to cover the transaction and allocate the funds accordingly.

They’ll also validate your identity and stamp or mark the cheque to indicate the guarantee of payment for the recipient.

Below are some of the benefits and drawbacks of a certified cheque and scenarios where you may want to use one.

Benefits

  • A safe and convenient way to pay for a significant purchase compared with cash
  • There’s no chance it will bounce as the bank has verified that the sender has enough money in their bank account to cover the transaction

Drawbacks

  • Once it’s issued, you’re generally unable to put a stop payment on it
  • You must pay a fee to obtain one

When Should I Use a Certified Cheque?

A certified cheque is an ideal payment method if you plan to purchase an expensive item, like a pre-owned car.

It’s convenient and less conspicuous than handling thousands of dollars in physical cash, which is prone to theft and easily lost in transit.

Even if you have no qualms about using cash or a personal cheque to complete a significant purchase, the seller may request the payment specifically in the form of a certified cheque.

From their perspective, the possibility of the cheque bouncing could be a concern.

Fun Fact

When you deposit a certified cheque for a large sum, it may take a few days for the money to appear in your account as the bank may place a hold on it. However, they’ll typically release a portion of the amount right away for you to use.

Frequently Asked Questions

  • Which is better, certified cheque or money order?
  • Which is cheaper – A money order or a certified cheque?
  • Is a money order the same as a cheque?

Mark is a freelance writer who specializes in covering personal finance topics related to investing, mortgages, credit cards, and more.

He is passionate about educating people on how the financial markets work and providing tips to help them better manage their money. Mark holds a bachelor’s degree in finance from the Northern Alberta Institute of Technology and has more than a decade of experience as an accountant.

Outside of writing and finance, he enjoys playing poker, going to the gym, composing music, and learning about digital marketing.