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- A money order is like a check you can buy with cash — it's a secure way to send or receive money.
- You can buy a money order from a financial institution, a grocery store, or the post office.
- A money order is more secure than a personal check, and provides a paper trail should a payment ever come into question.
Have you ever seen a commercial that said to "send check or money order"? Maybe you've noticed signs at the customer service desk at your local grocery store or post office and wondered: What is a money order? You've come to the right place. Keep reading to learn about money orders, including how they work and why you may want to use one.
What is a money order?
A money order is a financial instrument that allows you to move funds. In many ways, a money order is like a check you can buy with cash. Once you have the money order in hand, you can use it to make a purchase or send someone else funds.
While you probably won't use money orders often, they can be extremely useful in certain situations, particularly if you need to send money to someone who doesn't have a bank account or need to send guaranteed funds.
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When its best use a money order
Money orders are best for purchases where you don't know the other person well. For example, many landlords require a money order for the first month's rent or after receiving a bad check. Unlike a personal check, the landlord can trust with nearly 100% confidence that a money order is good, as long as it's not fraudulent.
Money orders could also be good for large person-to-person purchases. If you are buying a car on Craigslist or another marketplace, the seller may want payment with cash or money order to ensure they actually get paid.
A money order can also give you a little more privacy than a personal check, as it doesn't contain your full address or other personal information. They are safer to mail than cash, which also makes them popular for remote purchases that don't take place online.
How to buy a money order
Money orders are typically bought with cash and then treated like a paper check from a bank account.
Here are some places you can generally get one and how much it may cost:
| Places to buy a money order | Price to buy a money order |
| Walmart | maximum fee of $1 |
| USPS | $2 for money orders under $500; $2.90 for money orders of $500.01 to $1,000; $0.65 for postal military money orders |
| Grocery store | $1 to $3 |
| Bank | $0 to $5 depending on your checking account |
| Credit Union | $0 to $5 |
Money orders are issued through partnerships with major providers like Western Union and MoneyGram. When buying a money order, plan to pay with cash, or sometimes debit, including a fee that is typically around $1 to $5 per money order.
Most money orders have a limit of $1,000. If you need to move more than that, you'll probably need a cashier's check instead.
How to complete a money order
After your money order is printed, you can fill out a money order. Write the payee information and sign it, just like a check from your own personal checkbook. The recipient will then endorse the back and deposit it like a check in their bank account, or cash it.
Because the money order is prepaid and coming from a trusted entity like Western Union or MoneyGram, there is virtually no chance it will bounce like a regular check. That is why a money order is often considered a more secure payment method than a check. Money orders also leave a paper trail that can act as proof of payment or proof of funds in the event of a future dispute.
Be sure to keep your receipt when buying a money order. If your money order is lost, you can generally get it replaced if it hasn't been cashed or deposited.
Money order alternatives
Money orders were a popular way to pay for many years, but competing online products and other money order alternatives make them less common these days. Here are some alternatives to money orders to consider:
- Cash: While you might use plastic most of the time, good old cash is still a trusted payment method for many purchases.
- Online payment: Online payments using services like Venmo, Cash App, PayPal, Zelle, Google Pay, Apple Pay, and even Facebook Messenger offer options to connect to a bank account and send money to someone else using your phone or computer.
- Personal check: Personal checks don't offer privacy for the buyer or guaranteed funds for the seller, but they are usually free to use with any regular checking account.
- Cashier's check: A cashier's check is even more secure than a money order and can be purchased with higher limits. However, there's usually a higher cost and you can generally only get them from a bank or credit union.
What to do if you've been given a money order
If you have a money order and don't know what to do with it, you have a few options to get cash or add it to your bank account.
The easiest option for most people is to make a mobile check deposit. Just like any other check, you can snap a picture to deposit it into your checking, savings, or another account. If you're not into mobile banking, you can also deposit it at an ATM or with a teller.
If you want to get cash for a money order, the best option is to take it to the issuer. Your bank may also be willing to cash a money order. Beware check-cashing services, as they charge extra to give you cash for your money.
Money order FAQs
Where can I cash a money order?
You can cash a money order at your bank or post office for free. You can also cash a money order at a grocery store or retailer, like Walmart, though there may be fees.
Can money orders be refunded?
Yes, money orders may be refunded as long as it hasn't been cashed by the payee. You can request a refund by contacting the issuer and filling out a form. Keep in mind there may be fees involved, depending on where you got the money order. Also, it's helpful to have your money order receipt.
Can money orders be purchased with a debit card?
Yes, most places allow you to use a debit card to purchase a money order. For example, the post office and Walmart let you use a debit card but not a credit card.
Can money orders be deposited?
Yes, typically you can deposit money orders into a bank account by visiting a branch, using an ATM, or making a mobile check deposit.
Do money orders cost money?
Money orders usually will require a fee between $1 and $5 at most places. However, depending on which type of checking account you have, you might be able to waive standards fees for money orders at a bank or credit union.
from All Content from Business Insider https://www.businessinsider.com/personal-finance/what-is-a-money-order
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