While we’ve come a long way in the world of digital, instant payments, a money order might seem outdated. However, even with all the apps out there promising instant payments, there’s still a place for the traditional money order.
Below we cover some things you need to know about money orders, including what they are, how to get one, the benefits of using one, and answers to some other common questions.
What are money orders?
A money order is a paper form of payment, much like a check. The main difference between a money order and a check is that money orders have a payment that’s guaranteed.
Checks can bounce, whereas money orders are purchased with cash or another form of payment like a debit card. In other words, they’re paid for with guaranteed forms of payment, unlike checks or credit cards where the payment comes later.
Benefits of using a money order
The biggest benefit of using a money order is that it’s a safe and easy alternative to cash or checks. When you need to make or accept a payment, but for some reason, you can’t use cash, checks, or instant transfers, a money order is the next best solution.
Another benefit is that because they are a guaranteed form of payment, they can’t bounce like a check can.
How to get and use a money order
You can get a money order at post offices, banks, Western Union outlets, Walmart locations, or 7-Eleven stores, so it’s easy enough to obtain one or cash one in. Depending on where you get the money order, there may be a fee and those may vary between locations.
The process of filling out a money order varies somewhat, depending on the issuer. At the very least, to use a money order to pay someone, you have to fill in your name, the recipient’s name and/or address of the person or company. Make sure to fill out the money order as soon as possible, triple check everything, and keep the stub and/or receipt.
To cash a money order, you can take it to a bank, credit union, grocery store, and some retail stores. Do not sign the back of the money order until you are ready to give it to the cashier or bank teller to deposit. You will need to verify your identity and pay any fees that apply.
FAQs about money orders
How much is a money order?
One downside to using money orders is that there’s usually a fee attached. The good news is that the fee is usually very small.
The U.S. Postal Service calculates the fee based on the amount that the money order is for, so the more you send, the higher the fee is. Money order amounts between $0.01 to $500 have a fee of $1.45, and amounts between $500.01 to $1,000 come with a charge of $1.95.
Can a money order be canceled?
If you need to cancel a money order, you can do so as long as it hasn’t been cashed yet. You will need to contact the issuer and provide the necessary details, such as the money order purchase date and a tracking number. You may have to pay a fee to get it canceled. You cannot stop payment on money orders, but a lost or stolen money order can be replaced.
If you think a money order has been cashed fraudulently, contact the issuer of the money order.
Can a money order bounce?
As money orders are guaranteed forms of payment, unlike checks, they cannot bounce. This is one of the reasons they’re a preferred alternative to checks.
In fact, some organizations will not take checks because there’s always the possibility of them bouncing. A money order is a more reliable alternative.
Can a money order be traced?
In the event that you lose a money order or even believe one’s been stolen, you can track it. Money orders have tracking numbers, so your first step, in this case, is to approach the money order issuer to check its status and see if you can cancel it. The steps involved in tracking a lost money order may vary.
How long is a money order good for?
If you find a long-lost money order lying around, good news! You can still cash it. Money orders do not have an expiration date because they’ve already been purchased, unlike checks.
However, according to Western Union, money orders that aren’t cashed between one to three years of the purchase date may have a non-refundable service charge deducted from the total amount.
Who signs a money order?
The sender of the money order must provide a signature, much like you would on a check. This signature makes the money order valid, and without it, the recipient won’t be able to cash it. Remember, as a recipient, do not sign the back of the money order until you are ready to give it to the cashier.
A simple and safe way to send payments
While money orders may not be everyone’s first choice when it comes to making payments, there are still plenty of reasons to use them. If you want to send cash to someone who doesn’t use online banking or peer-to-peer transfer apps, for example, a money order is a suitable alternative.
If you’re considering sending cash by mail and don’t want to rely on a check, money orders are a simple and safe way to send payments. Be sure to check out the pros and cons, as well as the costs, before deciding to use one.