Banking 101: Everything You Need to Know About Money Orders
Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.
Say you need to pay your utility bill, but the company doesn’t accept personal checks — and sending an envelope full of cash isn’t a safe option. Money orders are an alternative and secure form of payment to consider.
How money orders work
Money orders are like prepaid checks. You provide the funds upfront and fill out an order that, like a personal check, is endorsed to a specific recipient.
You don’t need a bank account to purchase a money order, which makes it a useful bill-pay method for those who don’t have checking accounts. It’s also more secure than both cash and personal checks. You can safely send one in the mail, it doesn’t contain any account information and, because it is prepaid, it won’t bounce when deposited or cashed.
You can purchase money orders from most financial institutions, but they’re also available at many convenience stores, supermarkets, money transfer and check-cashing companies, as well as the U.S. Postal Service. One option is to search for local branches of Western Union or MoneyGram, which are often found inside stores such as Walmart, CVS and 7-Eleven.
Money orders are generally sold in amounts up to $1,000, although the Postal Service limits international money orders to $700 (or $500 if purchased for El Salvador or Guyana). There is no minimum, but you’ll have to pay a fee for each order.
These fees vary depending on where you buy. For example, the Postal Services charges $1.20 for money orders up to $500, $1.65 for those between $500.01 and $1,000, and $8.55 for all international transactions. Wells Fargo charges a flat fee of $5. You may find less expensive or even fee-free money order options. Amscot, a Florida-based financial services company, offers money order purchases at no charge.
Keep in mind that these fees are for single money orders. If your transaction is larger than the maximum allowed, you may have to purchase multiple orders and pay a fee for each, which can add up quickly. If you use money orders often, save money by shopping around for the lowest fees.
Pros and cons of money orders
Money orders are straightforward, secure and accessible to anyone with cash, but they do come with fees and a low limit. Before you choose a money order as a method of payment, consider the pros and cons.
Pros | Cons |
---|---|
Trackable and safer than cash | Low maximum amounts (often around $1,000) |
Don’t need a bank account | Fees |
Can be used internationally | Can be counterfeited or altered |
Funds are guaranteed | Must be purchased in person |
Widely available |
How to get a money order
Money orders are available at banks, credit unions, post offices, check-cashing shops and local retail stores such as supermarkets, convenience stores and pharmacies. To find Western Union and MoneyGram locations in your area, type your ZIP code into their locator tools and filter for sites that sell money orders.
While it may be convenient to pick up a money order from your bank or a store you’re already visiting, keep in mind that fees vary widely, and it may cost less to purchase at another location. In most cases, you must buy money orders in person.
You can purchase money orders using cash, check, debit or credit, though not all issuers accept the latter, and some may process credit transactions as cash advances, which come with higher fees.
Besides a method of payment, you’ll need to provide the recipient’s name and, depending on the form, your name and address. If you’re using the money order to pay a bill, such as your utilities, you may also need an account number so that the recipient knows how to apply the money you send.
Money orders look similar to personal checks. To fill one out:
- Write the recipient’s (payee) name — either an individual or business — on the “pay to the order of” line.
- Fill out your information in the purchaser section, usually referred to as “from,” “sender,” “remitter” or “purchaser.” Some money orders require your name and address, while others may have space only for your name.
- Sign on the signature line.
- Use a black gel pen — ink is more difficult to erase — write legibly and ensure all information is entered correctly and the amount is what you paid for. You cannot make changes once the money order has been processed.
- Complete the money order immediately, and don’t leave any fields blank. This leaves less room for fraudsters to alter your order.
Money orders are sometimes used in scams. While they’re more secure than cash, they can still be stolen or altered. Drop completed money orders in a secure post office box or hand-deliver to the recipient. Don’t leave them in your personal mailbox.
Once you’ve sent a money order, keep your receipt until you’ve confirmed that the payee has received the payment. This receipt allows you to track the status of your order, including the date of deposit. If your money order is lost or stolen, you can use the receipt to submit a claim to the issuer and receive a replacement.
For Postal Service-issued money orders, you’ll have to fill out a claims form in person and pay a $5.95 processing fee. Western Union allows you to mail, fax or email forms. It charges $15 if you have a receipt and $30 if you do not. Without a receipt, you may not receive a refund.
How to cash a money order
You can generally cash money orders in the same places you can purchase them: banks, credit unions and stores that offer check-cashing and other financial services. Some traditional financial institutions may allow you to put money orders through mobile or electronic deposit, while others will not.
When you’re ready to cash or deposit a money order, endorse the back just like you do a check. When cashing in person, you’ll need a valid form of identification, such as a driver’s license or passport. Depending on where you cash your money order, you may pay a small check-cashing fee.
Alternatives to money orders
Money orders are a fairly straightforward method of paying bills or sending money, but they’re not right for every situation. Before you settle on a money order, consider these alternatives.
Cashier’s check
Like money orders, funds sent via cashier’s check are guaranteed by the issuing financial institution. They’re often preferred, or even required, for business transactions in which cash and personal checks aren’t accepted. They differ from money orders in their higher maximums and higher fees (around $10), but they may still cost less depending on the size of your transaction.
Wire transfer
With a wire transfer, you can send a lot more money a lot more quickly than with a money order. Wire transfers can be in large amounts and often go through almost instantly because they are completed electronically. The fees are higher than both money orders and cashier’s checks — expect fees around $30 for domestic and $40 for international transfers, as well as additional charges on the recipient’s end. Wire transfers are useful for large transactions, but the fees could be prohibitive for smaller amounts.
Personal check
Personal checks are easy to use, can be filled out at home and carry no processing fees. But they require the payer to have a bank account and they’re not guaranteed, which means they can bounce if the sender has insufficient funds in that account. For this reason, some businesses may not accept them.
If you have cash flow concerns as the payer, keep in mind that you have to keep your balance high enough until the check is deposited. Personal checks are also less secure than other payment forms because bank account numbers are printed on them.
Prepaid cards
If you don’t have a bank account, a prepaid card is another way to send money. These prepaid cards are like gift cards: You can buy them at retail stores and use them anywhere debit cards are accepted. The downside of these cards is potential fees to purchase and load them. They’re also not endorsed to a specific person, so if they’re lost or stolen, anyone can spend them.
Online bill pay
Online payment platforms such as Zelle or PayPal are thought to be more secure than sending money via paper check. These services require you to have a bank account to send and receive funds. There may be daily transaction limits, but generally the fees are low or zero.
The bottom line
A money order may be a good — and secure — alternative to cash or personal check if you have bills to pay or are sending sums less than $1,000 to family, friends or businesses. Be sure to look for the lowest fees, especially if you plan to buy multiple orders.
Oh yeah, good point.
Except wait a minute, yes it is.
I blame the banks.
The anger, the lack of substance, the lack of purpose people display on this site, to normal people, is the opposite of success.
Normally, I don't go to those places because because most of them are not in great areas and I try to stay out off those areas to the extent possible.
https://www.google.com/maps/uv?hl=en&pb=!1s0x88890e3420b32243%3A0xea851f99e772d5de!2m22!2m2!1i80!2i80!3m1!2i20!16m16!1b1!2m2!1m1!1e1!2m2!1m1!1e3!2m2!1m1!1e5!2m2!1m1!1e4!2m2!1m1!1e6!3m1!7e115!4shttps%3A%2F%2Flh5.googleusercontent.com%2Fp%2FAF1QipM4ZT2YIKV25S29GVTtHs0S8vavp6QbfWqWNDcu%3Dw213-h160-k-no!5seasy%20money%20parkway%20east%20birmingham%20-%20Google%20Search!15sCAQ&imagekey=!1e10!2sAF1QipM4ZT2YIKV25S29GVTtHs0S8vavp6QbfWqWNDcu&sa=X&ved=2ahUKEwi6hbDd1bPgAhUQi6wKHS_FDVsQoiowCnoECAYQBg
The free money orders is probably meant for their payday, installment loan or title loan customers but the sign did not say that.
Easy Money 9420 Parkway E, Birmingham, AL 35215
They appear to have 14 locations in my Metro Area. 4-5 are in areas that are ok. The rest are not so ok. Certainly would not go at night.
How can you prove that they received the MO without sure confirmation? Many of those companies cash the MO through third party name and you never see the service or merchandise sent to you.
Avoid MoneyGram or WesternUnion if you can. Both have small amounts ($500 max -- the article is WRONG when it says $1000 max, it's $500 max now for a MoneyOrder with MoneyGram, sigh) and their fees aren't cheap (differeing, but set by the places where you get them).
INSTEAD, trying seeing if your CREDIT UNION offers either Money Orders -- or a "BANK CHECK" for free. For most purposes, a BANK CHECK is the same as a MONEY ORDER. Most of the credit unionsI deal with offer at least 1 per day free (some 2 per day).
If you are unbanked, or bank only at a Bank instead of a Credit Union (in which case opening up a credit union account is a more important thing to get fixed than this), and for some reason you MUST have a MoneyOrder, places like WalMart and your local Supermarkets are often the cheapest place to get them (cheaper than, say, going to the 7-11 for the same thing). There are also Postal Money Orders from your local post office, though they are not really cost effective.
Open an account at a credit union where they will offer at least 1 free bank check a day (NavyFed I believe it's 2 free per day. Most of the other CUs I belong to are 1 free a day).
Maybe Deposit Accounts should consider eliminating the comments section after all the articles. It seems to bring out all the bored trolls. Thank you DA for a very informative (and free) website.
When it came to better financial choices, I learned at a very young age long before the "internet" ever existed.
I've seen situations where Ken Tumin (or his staff) has posted rate changes for a particular financial institution, I've then contacted that FI only to be told that "that rate hasn't changed", then a day or two later found that the rate or offer in question actually DID change, on the exact date this website said it did! So yes - the accuracy and timelines of rate data on this website is one of its biggest benefits.
1. Rewards credit cards
2. Checking account
3. Savings account with bill pay
4. Automatic debit from checking or savings
5. cash
6. free cashiers checks offered by most banks
No offense intended but this should be filed in the what to avoid category.
https://www.huntington.com/checking-account-promotions-bonuses-offers
Don't worry after you open the card you don't need to keep a account with them you can still have the card.
Just a tip when setting this up you will need to remember to update your credit card expiration date with all of your utility companies BEFORE your credit card expires. Nobody tells you this but they don't do it automatically when a new card is issued.
On the other hand the utility company for my own house does NOT do this "surcharge" thing, therefore this is the place where the monthly "rewards checking" charges, etc., are placed.
Admittedly there are fewer and fewer "rewards checking" accounts still worth the effort, but there are still some.
See if any of these work for you:
https://www.cardrates.com/advice/best-credit-card-for-paying-bills-and-utilities/
https://cashplus.usbank.com/merchants/index?return=site%2Fhow_it_works
No annual fee as well.
https://www.creditcards.com/credit-cards/us-bank-cash-visa-signature-card/
There is a $200 bonus floating around the web but it appears to be targeted.
also there is a new 5% category coming "TV, Internet & Streaming Services will replace Car Rentals as a 5% Cash+ Category on 4/1."
The employees of online banks & credit unions have far more to do than worry about how much money goes in an out of your checking account.
I have never given it a second thought.
I used to manage an eatery when I was very young and I told them they should be keeping a daily log that corresponds to what they report at work.
When doing that, I've never known a waitress to get in trouble with the IRS.
I heard about one who was near full time, kept no records and the IRS basically determined she earned X amount and said she owed taxes on it. Because she could not prove otherwise, she had to pay it.
You must have tip income at a whole other level.
I've never known the IRS to audit 3rd party bank account records.
I mean, I know they could...in theory. Just not aware of it happening.
There are significant benefits to use cash reward credit cards coupled with buying money order. The process is hidden for the general public; I will stop at that:-)
I probably already spoke too much here. :D Yes, MS exactly.
Very few sources for buying CD via credit card, as far as I know.
Debt Collection
I know someone who had a bill in debt collection and they came to an arrangement with them for a monthly payment. The collection agency constantly calls them wanting a debit/credit card number or checking acct. number so they can set up an automatic payment that way. They were advised to make the monthly payment with a money order, because if the collection agency was dishonest they might start taking the payment from one of their accounts if they had that information. Sounds strange, but maybe they do stuff like that?
1. They are free at Chase if you have a Premier checking account. Not sure if they still have this type of account or not, ours came with our mortgage years ago. One of the few services I actually use at Chase.
2. Sometimes Money Orders really are the best way to pay. I occasionally buy antique currency from Lyn Knight Auctions (a large auction house with decades-old reputation). While I could pay for my purchases with a personal check, they hold those for 10 days. If I pay with a money order my purchase ships immediately. They don't accept cashier's checks or credit cards. I don't know why, but there's definitely nothing shady about the auction house. I've bought several thousands in merchandise and never had a problem.
3. Whenever I open a new business I use a money order to pay for my state paperwork. The business can't get a bank account without the state paperwork and I don't want to mix and funds from my other businesses or personal accounts. Plus, money orders get processed faster.
Money order you can
Search for it
More than 3 years old you have to file with unclaimed, but when I deposited it, it says pending authorization, then it says available ballance, then they take it out again. If it went thought authorization and was put in my account, doesn't that mean its cashable? Also if it expires and goes to the state why is there no expiration on the money order and Google say there is no expiration for money orders for td bank. What do I do..please help me.