A money order is a paper payment, like a check. It is considered safer than a check because it’s prepaid, so there’s no risk of a money order “bouncing.”
While you likely use cash, a credit card, or a debit card as your primary payment method, a money order can come in handy in certain situations. For instance, if you need to send money internationally or don’t have easy access to a bank or credit union.
Keep reading to learn what a money order is, how to get a money order, and how much a money order costs.
How do money orders work?
Similar to paper checks, money orders are issued in the form of a paper document, and they are used when you want to pay for something. To purchase a money order, you need to provide money upfront. This ensures that the person or institution you give the money order to will receive their payment.
For example, if somebody gives you a money order worth $100, it’s as good as cash once you deposit it at your bank or exchange it for money.
Instead of being backed by your personal bank account like a check, a money order is backed up by an agency or large corporation. This makes it a more secure form of payment.
How to get a money order
If you’re wondering how to get a money order, you can purchase one at the following places:
- The U.S. Postal Service. Every U.S. post office accepts debit cards as payment for money orders. You can find a post office near you using the USPS locator.
- Money transfer outlet. This includes places like Western Union or MoneyGram and some convenience stores, drugstores, supermarkets, and check-cashing outlets. Even some major retailers like Walmart sell money orders.
- Banks and credit unions. While not all banks and credit unions provide money orders, many do.
How much does a money order cost?
When you purchase a money order, you have to pay for the face value amount and any associated fees.
Money orders are relatively inexpensive, but you can usually get a better deal at a supermarket or convenience store than at a bank or credit union.
While the cost will vary between providers, for a $1000 money order, you can expect to pay around $1 at retail stores like Walmart,1 $2.90 at U.S. Postal Service (USPS),2 and $5 at a bank.3,4 Again, the price will depend on the financial institution, so ask beforehand.
You can pay for a money order with cash or a debit card. You can also pay for a money order using a traveler’s check at a post office.
How to fill out a money order
Filling out a money order is pretty straightforward. You’ll need to include the following:
- Your name and contact information.
- The name of the recipient and their contact information.
- Possibly your address and phone number.
- There may be a memo area that allows you to specify what the money order is for.
- You may need to sign it with your signature, similar to a personal check.
Make sure you keep your receipt in case you need proof of payment or want to track when the money order is received.
How to cash a money order
If you receive a money order and want to cash it, you can follow these steps:
1. Find a location that cashes money orders
You can cash money orders at numerous locations. Banks, convenience stores, and credit unions are a few common places to cash a money order.
2. Sign your money order
Make sure you’ve filled out your money order. Once you get to the location, sign it just like you would a check.
3. Show a valid ID
To verify that you are authorized to cash a money order, you must identify yourself, so bring a government-issued ID like a driver’s license or passport.
4. Pay fees (if applicable)
It is free to cash a USPS money order at a Post Office.2 The same is often true if you cash a money order at your bank. If you cash it at another location, you might be asked to pay a fee.
5. Take your cash
Get your cash and store it somewhere safe.
When to use a money order
There are a few scenarios where it might make sense to use a money order. You may want to use a money order if:
- The receiver of the funds doesn’t want to risk getting a bounced check.
- You want to protect your privacy. Money orders don’t include bank account information.
- You want a receipt as proof of having made a payment
- You’re worried about losing cash (either misplacing it or having it stolen)
- You want to avoid paying an ATM fee to withdraw cash
Downsides of using a money order
- Fees can add up: If you’re using money orders regularly because you haven’t opened a checking account, fees can add up quickly, especially if you have to make sizable payments requiring multiple money orders.
- Target for scammers: Money orders are traditionally considered safe, but they are still susceptible to fraud. It’s possible for someone to intercept the money order and attempt to put their information over the recipients. Don’t leave a money order lying around.
- Bank processing time: If you receive a money order as payment, the bank may place a hold on your account until the money order clears. This hold may last for two or three days, which can delay access to the funds.
- More work than other payment methods: Buying a money order requires extra steps for the purchaser. You often need to make a special trip, pay in person, speak with someone during business hours, and pay a fee to secure a money order.
What is a money order? Now you know!
When you need a more secure alternative to sending cash but can’t use a check, money orders may be your best bet. Before purchasing or cashing a money order, remember:
- Money orders are backed by an agency or large corporation.
- You need to provide money upfront.
- Be prepared to pay a small fee.
- Know the name of the payee and the amount you want to send.
- Fill out the necessary fields.
- Keep the receipt.
Tired of going to the bank to cash your checks? Learn how to cash a check from the comfort of your home using Chime’s mobile check deposit guide.