What Is A Money Order? (2023)

Ben Luthi7-minute read
December 04, 2021

If you're looking to make a payment or complete a financial transaction, a money order can be a good alternative to cash or a personal check. Before you buy one, though, it's important to understand how money orders work, where to get them and what your alternatives are.

Money Order: Definition

A money order is a paper payment method that's similar to a personal check. You can use a money order to pay for goods and services or make bill payments.

But unlike paper checks, which are drawn from a checking account, a money order is prepaid, which means the funds are guaranteed. As a result, some recipients may prefer or even require them because there's no risk of them bouncing like a personal check might.

How Do Money Orders Work?

To get a money order, you must purchase it from a provider. You'll generally need to pay a small fee, but some financial institutions may waive the fee for certain customers.

Like a personal check, a money order is written out to a specific payee, and both you and the receiver must sign the document.

Money orders typically have a limit of $1,000, so if your transaction amount is higher than that, you may need to purchase multiple money orders or use another payment method, such as a cashier's check.

(Video) What is a Money Order?

How To Get A Money Order

You can get a money order from a bank, credit union, the U.S. Postal Service (USPS), Western Union or certain retailers, such as Walmart, Kmart and others.

Because money orders are prepaid, you must provide the payment upfront in the form of cash or a debit card – you generally can't use a credit card to buy one. You'll also be charged a small fee, which can vary depending on the provider and, in some cases, the amount of the money order.

When To Use A Money Order

There are a few different situations where it might make sense to use a money order instead of cash or a personal check. Some examples include:

  • Paying bills such as rent or utilities
  • Sending money securely in the mail
  • You don’t have a checking account
  • Your check might bounce
  • Your money is being sent internationally

If any of these describe your situation and your transaction is under the $1,000 limit — or you're willing to purchase more than one — consider a money order as an option.

Where Can I Get A Money Order And How Much Does It Cost?

There are several different places you can get a money order. Here are some of the more popular options and what you can expect to pay:

Location

Cost

Walmart

Up to $1

Kmart

Up to $1.50

Money transfer agents

Fees vary by location

The U.S. Postal Service

$1.45 for orders up to $500; $1.95 for orders up to $1,000

Military money orders (USPS)

$0.50

International money orders (USPS)

$10.50

Banks and credit unions

Fees vary depending on the financial institution

How To Fill Out A Money Order

The process of filling out a money order is relatively simple, but it can be confusing if you're using one for the first time. Here's a quick summary of the steps.

1. Fill In The Recipient’s Name

The recipient is the person who is receiving your money. You’ll fill in the name of the recipient on the line that says, “Pay to the Order Of.” This recipient is the only person who can cash the money order, which cuts down on the likelihood of fraud.

2. Write Your Address In The Purchaser Section

Since you’re the individual purchasing the money order, you’ll have to include your information as well. You’ll need to fill out your address in the purchaser section. By providing this information, it’ll be easier for the recipient or their bank to contact you if there’s a problem.

3. Add Your Account Number

If you’re purchasing the money order to pay a bill, you’ll need to include your account number. You can enter the account number in the “payment for/account number” field.

4. Sign The Bottom

Once you’ve filled out all the necessary information, you should sign the money order at the bottom. You’ll fill this out on the line that says “purchaser’s signature.” Without your signature, the money order can’t be cashed.

Make sure you don’t sign the back of the money order. Like a personal check, this line is for the recipient to sign before cashing the money order.

5. Keep The Receipt

Once you’ve finished purchasing the money order, make sure you hang onto your receipt. The receipt is your proof of payment, and you may need this if there’s a problem later. The recipient will also have tracking information, so you’ll be able to verify with them that the money order was received and cashed by the recipient.

(Video) What is a money order

Pros And Cons Of Money Orders

There are both benefits and drawbacks of using a money order to purchase a good or service or to make a bill payment.

Pros

  • Funds are guaranteed and trackable
  • Does not include your bank account information
  • Can be issued in a different country than it’s cashed in
  • No bank account required

Cons

  • Must pay a fee to purchase one
  • Must be purchased in person
  • Risk of spam and fraudulent money orders
  • Low maximum amount

Money Order Alternatives

Depending on your needs, a money order may or may not be the best way to complete your financial transactions. Here are some alternatives to consider and when they're worth using.

Cashier’s Checks

Cashier’s checks are similar to money orders in that they are issued to a specific payee, and the funds are guaranteed. But unlike money orders, cashier’s checks can only be purchased at a bank or credit union. They are also available for larger amounts, whereas money orders limit you to $1,000.

Wire Transfers

A wire transfer is an electronic transfer of guaranteed funds. Wire transfers do come with higher fees than money orders or cashier’s checks, but they can’t easily be faked or canceled. They can be especially beneficial if you need to send money internationally.

Electronic Payments

Electronic payments are an acceptable form of payment for things like bills and utilities. These payments are typically made through your online banking platform. Also, peer-to-peer apps like PayPal or Venmo allow you to exchange money with friends and family members quickly and often at no charge.

Personal Checks

Unlike money orders or cashier’s checks, personal checks aren’t guaranteed. But most businesses, like utility companies or phone companies, will accept personal checks.

Cash

If the transaction is simple and in-person, cash can be a straightforward way to complete your purchase or transfer of money without additional steps.

(Video) ✅ How To Fill Out A Money Order 🔴

How To Cash A Money Order

If you've received a money order, you'll need to sign the back of the money order and provide photo identification to prove that you're the recipient. You can then cash it or deposit it into your bank account.

If you cash the money order at retail stores, convenience stores or similar places of business, you may be charged a fee for the process. The same goes if you try to cash a money order with a bank or credit union where you're not a customer. So if you have a bank account, it's generally best to cash or deposit with your financial institution.

Additionally, you can cash a USPS money order at any post office for free.

Where To Cash A Money Order

You can generally cash a money order at the same places that provide them. That includes banks, credit unions, post offices, retail stores and more. In some cases, it may make sense to cash it with the same entity that issued it, especially if there's no fee involved.

But if you're going to be charged a fee, consider cashing or depositing the money order with your bank or credit union.

How To Spot A Fake Money Order

Unfortunately, money orders are often used by scammers to either pay other people or to request payment. As such, it's important to know what to look for when you're being offered a money order.

  • Examine the paper: Money orders come in different sizes and designs, so check for the provider online to get an idea of what it should look like. For example, USPS money orders have watermarks of Benjamin Franklin on the left side and a vertical thread with the letters "USPS."
  • Check the dollar amounts: If the dollar amount looks discolored, it may have been erased and reprinted with a higher denomination. And remember, money orders cannot be higher than $1,000 in the U.S., and international money orders won't exceed $700.

Also, consider the circumstances surrounding the money order. If someone is asking you to deposit one into your bank account on their behalf or wants to send you a money order worth more than what you're selling and asks you to send them the difference, it's likely a scam.

(Video) What is a Money Order? | Money Order - why would you do it?

Money Order FAQs

Do money orders expire?

Money orders don’t come with an expiration date. However, if you wait too long to cash them, you might have to pay a service fee. This time limit should be identified on the back of the money order.

Can you buy a money order with a credit card or debit card?

The easiest way to pay for a money order is with cash or a debit card. If you purchase a money order from a bank, then you can usually transfer the money directly out of your savings or checking account.

In the past, certain providers, like Western Union and 7-Eleven, have allowed customers to purchase a money order with a credit card, but that's no longer the case.

I lost my money order, how can I cancel it?

If your money order has gone missing and hasn't been cashed, you can cancel it by contacting the issuer. You'll typically need to provide the receipt and its details, including the tracking number, date and location of purchase and amount. You'll also typically need to pay a cancellation fee.

Depending on the provider, you may be able to submit your cancellation request in person or via email, fax or mail.

The Bottom Line

A money order can be a great way to pay a bill, make a purchase or send money to someone else because it provides more security than cash or a personal check and also guarantees funds for the recipient.

However, there are some additional steps to getting a money order, and as a recipient, it's important to watch out for scams. Make sure you understand the process and also some alternatives to ensure that you use the best payment method for the situation.

You can learn more about money and other personal finance topics in the Financial Learning Center.

(Video) ✅ How To Fill Out Western Union Money Order 🔴

FAQs

What is a money order answer? ›

​A money order is an order issued by the Post Office for the payment of a sum of money to the person whose name the money order is sent through the agency of the Post Office. A 'Payee' is the person named in money order as the person to whom the money is to be paid .

What is a money order simple definition? ›

A money order is a certificate, usually issued by a government or banking institution, that allows the stated payee to receive cash on demand. A money order functions much like a check, in that the person who purchased the money order may stop payment.

What information does a money order need? ›

Generally, if you're sending a money order, the required information you'll need is: Name of payee (i.e., the person who is being paid) Payee's address. Payment amount.

What is a money order quizlet? ›

A money order is a purchased certificate used to pay a specified amount to a specific payee. They are a safe, convenient way to send payment through the mail as an alternative to personal checks or cash. Money orders sold and backed by the U.S. Postal Service are called postal money orders.

Is a money order just a check? ›

Just like personal and cashier's checks, money orders are secure forms of payment, representing an amount of money. Unlike checks, a money order does not pull funds directly from your account.

Is a money order a check or cash? ›

Money orders are another alternative to paying with a personal check, cash or cards. A money order is a prepaid check that isn't tied to a bank account. And because money orders are prepaid, the funds are guaranteed. So like a cashier's check, money orders also can't bounce.

What is money order used for? ›

A money order is a secure way to send money or make a payment — up to $1,000. Many recipients prefer money orders because, unlike a personal check, a money order can't “bounce” and clears almost immediately; therefore, they provide a fast, risk-free form of payment.

Is a money order only cash? ›

You can use cash or a debit card to buy money orders at the post office, Walmart, Western Union and your bank or credit union.

Why does someone use a money order? ›

Money orders let you send and receive large amounts of money safely without stupid bank fees. And most importantly, they help guard your personal information. Sure, money orders will include your name and address, but unlike a personal or certified check, they won't include your bank account or routing numbers.

How do you complete a money order? ›

You'll generally need to know the payee's name, the payment amount, the payee's address, and any other relevant details, such as an account number. You'll also need to bring a valid form of payment to buy the money order—cash, traveler's checks, and debit cards are all generally accepted by most issuers.

Does a money order require a signature? ›

Money orders need to be signed in order for the person who receives it to cash or deposit it. If you're sending a money order, your signature doesn't have to be witnessed. But if you're depositing a money order you received, your bank may want to see you sign it in person.

How do you prove a money order? ›

When you purchase a money order, you receive an order receipt. The receipt contains all the information needed to track your money order and shows the proof of value in case it's lost, stolen or damaged.

What is another form of money order? ›

Cashier's Check

Cashier's checks are similar to money orders. They're also paper documents issued to a specific payee and guaranteed by the issuer. However, only banks and credit unions issue cashier's checks. Convenience stores and money shops or the financial firms they partner with usually don't.

Is a money order a deposit? ›

Note. Having a bank account can potentially save you money and time over the long term. Depositing a money order is the same as depositing a check. Simply endorse the back of the money order and list it separately as a check on your deposit slip.

What type of payment is a money order? ›

Much like a check, a money order is a paper payment. Unlike a check, money orders can't bounce. You purchase a money order with cash or another guaranteed form of payment, such as a traveler's check or debit card.

How long does it take for a money order to clear? ›

10 The clearing process can take a few weeks, even if your bank's funds availability policy allows you to use the money immediately. If you use the funds and the money order turns out to be fake, the bank will require you to repay the amount.

How long does a money order take? ›

In general, money orders should arrive to the recipient in a couple of days. However, during weekends or holidays this might take longer. For this reason, make sure to wait at least 14 days before expecting some issue with the money order.

Which is safer money order or check? ›

Cashier's checks are generally considered more secure than money orders. Although there are check scams involving fake cashier's checks and money orders, a cashier's check has more security features than a typical money order.

Is a money order safer than cash? ›

Like a check, money orders are written directly to individuals or companies by name, requiring endorsement and identification to cash them. This makes money orders much more secure than cash, protecting the funds in case of loss or theft.

Can anyone cash a money order? ›

You can cash a USPS money order at a Post Office for free. You can also cash them at most banks and some stores. Rural carriers may cash money orders if they have enough money on hand.

Can a money order be Cancelled? ›

With most money order issuers, including USPS, Western Union, and MoneyGram, you can cancel the payment. 12 To do so, either fill out a form or take the money order back to the place you originally bought it. Bring identification and any information you have about the money order to start the process.

How much money can you put on a money order? ›

You can also consider the amount of the money order. Typically the limit is $1,000, so if it's in an amount larger than that, it may be fraudulent. Check for a discolored dollar amount too.

Can money order be cashed without a bank account? ›

If you need to send money to someone and you need to send it through the mail, the best way to do this is with a money order. A money order is something only the receiver can cash and you don't even need a bank account to get one.

Do banks cash out money orders? ›

You may be able to cash your money order at banks and other retailers (grocery stores, check-cashing locations or other stores where you've been able to cash checks in the past). In some circumstances, the bank or retailer may charge you to cash your money order.

Do I have to put my address on a money order? ›

The order needs to have the correct name, just like on a check, so the payee can successfully cash it. Purchaser: The next section requires the purchaser's information – that's you! Write your full name and address. This clarifies for the recipient who the money order is from.

Do money orders have your name on them? ›

Sign your Name in the Purchaser's Section

Sign the front of the money order where indicated, but leave the back of the money order blank as this is where the payee will endorse it.

Do you need ID to cash a money order? ›

To cash a money order, you'll need to first endorse it by signing your name on the back. You will also need to provide identification no matter where you're cashing your money order. If you don't have any ID, you can endorse the money order to someone else, like a sibling or friend, who does have an ID.

Who's address do you put on a money order? ›

Whose address do you put on a money order? If you're sending a money order, you'll need to put your own address in the purchaser section. This section might be labeled “from,” “remitter” or “sender” rather than “purchaser.”

Is money order a bank transfer? ›

Unlike a money order, a money transfer sends the funds electronically to a bank or other financial institution. If the person is far away, this might be a better option. A money transfer can be picked up just about anywhere in the world, often within minutes.

Can a money order bounce? ›

Like checks, money orders are paper documents that allow for the purchaser to specify the payee and amount. On the other hand, they are prepaid, so they can function similarly to cash. There's no risk of a money order bouncing, and if it's lost or stolen, you can often receive a refund or cancel it.

How long does a money order take to deposit? ›

This week, I deposited three different types of paper payments to see the actual time that it would take for them to clear (as in when the money actually transferred). Quick answer: Cashier's checks and money order cleared the fastest -- within the next business day.

What's the purpose of a money order? ›

Key Takeaways. A money order allows you to securely send up to $1,000 in exchange for a small fee. Money orders can be purchased at a bank, credit union, the U.S. Post Office, or some supermarket and convenient store locations.

What is a money order kids? ›

A money order is an order on the issuer to pay a certain sum of money upon demand to the person named in the money order. Money orders provide a means of safe, fast, and convenient transmission of small sums of money.

What type of check is a money order? ›

A cashier's check and a money order are both forms of payment that can be used instead of cash or personal checks, but that's where the comparisons stop. Cashier's checks are issued by a bank, are available in higher dollar amounts, are considered more secure than money orders, and have higher fees than money orders.

Why would you use a money order? ›

Money orders let you send and receive large amounts of money safely without stupid bank fees. And most importantly, they help guard your personal information. Sure, money orders will include your name and address, but unlike a personal or certified check, they won't include your bank account or routing numbers.

Can anyone use a money order? ›

It's easy to find a place to purchase a money order. You don't need a checking account to purchase or cash a money order. Only the recipient can cash the money order.

Is a money order safe? ›

Are money orders safe? Money orders are generally a safe alternative to cash or checks, since only the payee can cash or deposit it for the amount printed on its face. As long as you save the receipt, you can track your payment and recover any funds if it's lost, stolen or damaged.

Can you cash a money order? ›

Money orders are cashed for the exact amount on the order. You can cash a USPS money order at a Post Office for free. You can also cash them at most banks and some stores. Rural carriers may cash money orders if they have enough money on hand.

Why are money orders safe? ›

Like a check, money orders are written directly to individuals or companies by name, requiring endorsement and identification to cash them. This makes money orders much more secure than cash, protecting the funds in case of loss or theft.

Does a money order deposit like a check? ›

Depositing a money order is the same as depositing a check. Simply endorse the back of the money order and list it separately as a check on your deposit slip. Use caution when using your mobile device to deposit money orders.

How much does a money order cost? ›

USPS Money Order pricing works as follows: $1.45 for $0.01 to $500. $1.95 for $500.01 to $1,000. $0.50 for Postal Military Money Orders.

Is a money order better than a check? ›

Money orders are more secure than paper checks and are widely available. Banks issue them, as do many grocery stores, convenience stores, gas stations, the U.S. Postal Service and check-cashing outlets. Many issuers of money orders have a $1,000 maximum purchase limit.

Is a money order like cash? ›

A money order is essentially a prepaid piece of paper, similar to a check, that you get in exchange for cash. You can use them to send people money, and recipients can easily deposit them into their bank accounts.

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