What is a Money Order?

Nowadays, people are looking for more security in their financial lives, and to achieve that goal, they need the right tools.

One of the best secure ways to send money to anyone or make a payment is a money order. In the United States, many people choose this method because of its safety and facility to use.

WHW Team prepared a complete guide for you about money orders, explaining what it is, how it works, how to fill it out, and its pros and cons. Read this article until the end to have an overall comprehension of this topic.

What is a Money Order?

Money Order is one of the safest methods to send money to anyone or make payments like utility bills.

However, people can only make payments of up to $1,000. A money order is similar to a personal check, but personal checks can bounce if the sender’s checking account doesn’t have enough money in it.

Individuals and businesses easily accept money orders because they can be converted to cash.

Also, money orders have a small fee to be issued, it can vary depending on the issuer, but that fee usually is less than $15. In addition, they can only be claimed by the person they are addressed to.

The U.S. Postal Service started to issue money orders in 1864, trying to create a safer method to send money to other individuals through the mail. In 1882, American Express developed a competitive money order product too.

How do Money orders work?

A money order is a way to send money to other individuals and make payments. When you buy one, you need to fill out the name of the recipient or business and the amount that should be received.

Remember that domestic money orders have a limit of $1,000, but you can send more than only a single one, keep in mind that you will be charged again.

When filling out a money order, you need to pay attention to providing correct information, because only the person authorized can withdraw the cash.

The money order will show the issuer’s name, the name of the person who will receive the cash, and the amount of money sent.

When you buy one, you need to pay the amount of money you intend to send plus issuing fees.

Money orders can be issued at U.S. post offices, Walmart, Western Union, banks, supermarkets, convenience stores, etc. When buying one, you must pay with cash or a debit card.

A money order is a great payment alternative if you want to send money and don’t have a bank account or don’t want to share your banking information with the recipient. That payment method ensures more security and efficiency in all stages of sending money to another person or business.

All money orders come with a receipt, that carries a serial number, you should keep this information with you until you are sure that everything is okay. Tracing a money order without a receipt can be a difficult task.

Pros and Cons of Money orders

Before buying a money order you need to consider some pros and cons associated with that payment method. See below the main positive and negative points:

Pros

• Issuing fees can be considered small, that payment method is accessible to a lot of people
• You can send both domestic and international money orders, it’s possible to pay anyone around the world
• It protects your financial information, providing more peace of mind when making payments.
• You don’t need to have a bank account to send or receive money
• The money order can’t bounce, and it’s safer because only the recipient can take the money sent.

Cons

• Domestic money orders have a transaction limit of $1,000 if you want to send more money using this method, you need to send multiple debit orders
• It takes more time than other payment options like electronic transfers because the recipient needs to find an accepted place to cash the money.
• It’s very difficult to reverse after it’s cashed, will be almost impossible to recover the funds if you order to the wrong recipient or have been scammed.
• Have fees associated with it

How to fill out a money order?

Before starting the process of sending money to another person or business using a money order, you need to decide the amount of money you intend to send, and the payee’s name.

After that, you need to be sure about where the funds will come from like cash or debit cards. Also, you will need to look for a place that issues money orders like the U.S. post office, banks, credit unions, supermarkets, etc.

Once you have done these initial steps, it’s time to fill out your money order, follow the steps below:

1. Provide important details like the recipient’s name and address, it’s a must-need thing to do, only the person listed can receive the funds sent. Do it with patience.
2. Enter your name and address in the “purchaser” spot, it’s a valuable detail because your money order can be returned to you.
3. In the memo field, you will need to describe the purpose of the money order. Also, you can enter details like the account or order number needed to reference it.
4. You must sign the front of the money order, only the person receiving the money can sign the back to cash it.
5. Take care of the receipt for the money order with the tracking number, it’s important in situations like loss or stealing of the debit order.

How much does a money order cost?

Money order issuing fees can vary depending on the financial institution or store, usually, it’s a small fraction of the value of the order. Domestic money orders cost from under a dollar to up to around $5, depending on where you buy.

See below the main money order providers in the United States and the price charged:

• Walmart: up to $1
• Money transfer agents: depends on the provider, but often they charge $1
• U.S. Postal Service: $2.10 for money orders up to $500, $3 for up to $500.01-$1000, $0.70 for military money orders.
• Banks and credit unions: often $5, varying by financial institution

If you want to send an international money order (up to $700 in value) through the U.S. Postal Service, the issuing fee will be $49.65 plus the processing fee which will vary depending on the country.

Money orders vs Cashier’s Checks

Both payment methods are similar, they are good alternatives when cash or personal checks are impracticable. You can only buy both using cash or a debit card.

However, cashier’s checks are mostly used for large payments, and they are more expensive payment ways. A cashier check is a check written by a financial institution against its assets.

Money orders are usually used for small money transfers, with a limit of $1000, and you can buy one in various financial institutions and stores.

In conclusion, money orders are a safe payment method, they are usually used for small transfers. Also, they charge a small amount of money like $1, if you want to send money with more security, it can be a good option for you.

You can pay using other methods like personal checks, cashier’s checks, wire transfers, etc.

In addition, when buying a money order pay attention to all details involved in this process, and compile and review all information before sending it. Analyze the pros and cons of buying a money order to make an informed decision.

Take our tips and fill out your money order correctly, buy a money order at financial institutions like Walmart, banks, credit unions, the U.S. postal service, etc.

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