What Is a Money Order?

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. When you want to purchase a money order, you need to provide money upfront. This ensures that the receiver will get 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 take it to a financial institution to exchange it for money. In addition, 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 to the recipient.

If you are looking for a secure payment method, you can purchase a money order 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 outlets, which include places like Western Union or MoneyGram, as well as some convenience stores, drugstores, supermarkets, and check-cashing outlets. Even some major retailers like Walmart may offer a counter where you can buy a money order.
• Banks and credit unions.

How Much Is a Money Order?

When purchasing a money order, be prepared to pay for both the face value amount of the money order and its associated fee. Money orders are relatively inexpensive, but you will most likely get a better deal at a supermarket or convenience store than you would at a bank or credit union. You can pay for a money order with cash or a debit card.

Keep in mind that most money orders have a $1,000 limit. So, if you need more than $1,000, you’ll likely need to purchase multiple money orders.

Depending on the provider you go with, this is typically how much a money order will cost you at the following locations: 

Filling out a money order is pretty straightforward: You’ll need to write in your name and contact information on the front of the money order, plus the name of the recipient and their contact information.

A memo line allows you to specify what the money order is for. You then sign the front as if it were a personal check. Be sure to keep your receipt in case you need proof of payment or want to track when the order is received.

To recap, you’ll need to include the following basic information:

• Your name
• The name of the recipient
• Possibly your address and phone number. (Pro tip: If you want to retain your privacy, ask if this information is necessary.)
• There may be a memo area to fill in with notes
• You may need to sign it with your signature

Looking to cash a money order? Follow the steps below:

1. Find a location that cashes money orders

You can cash money orders at numerous locations. A few common places to cash a money order are banks, convenience stores, and credit unions.

2. Endorse your money order

Make sure you’ve filled out your money order. Once you get to the location, sign the money order just like you would a check.

3. Show a valid ID

In order to verify that you are authorized to cash a money order, you will need to identify yourself so make sure to bring a government-issued ID like a driver’s license or passport.

4. Pay fees (if applicable)

If you’re cashing your money order at your bank, you might not have to pay fees. Otherwise, be prepared to pay a fee.

5. You’re done!

Get your cash and make sure you place it securely with you.

You may want to use a money order in the following scenarios: 

• The receiver of the funds doesn’t want to run the risk of getting a bounced check.
• The person issuing the payment may need to cancel payment. For instance, if you believe the money order was stolen, you can pull the plug on issuing the funds.
• You want to protect your privacy. Money orders don’t include bank account information.

You may want to use a money order in lieu of cash for the following reasons:

• You want a receipt as proof of having made a payment
• You’re worried about losing the cash (either misplacing it or having it stolen)
• You want to avoid paying an ATM fee to withdraw cash

• Fees can add up: If you’re using money orders regularly because you lack a checking account, fees will add up fast, especially if you have to make sizable payments that require multiple money orders.
• Target for scammers: Money orders are traditionally considered safe, but they can be used in fraud. In fact, the perception that they are safe is exactly what makes them perfect for scams, and they’re sometimes prohibited as a form of payment because of this risk. A money order theft may be as simple as someone intercepting the money order and attempting to put their own information over the recipient’s. Or a scammer may pay someone via money order for more than the requested amount, then ask for the difference to be paid back. The money order turns out to be counterfeit, and the recipient is on the hook for it.
• Bank processing concerns: 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. If you need access to money, your account is frozen.
• Not very convenient: Buying a money order requires extra steps for the purchaser. You often need to make a special trip, pay in person, and speak with someone during business hours, and pay a fee just to secure a money order. Compare that to the ease of writing a check, or using an online banking service like Chime.

If you’ve decided a money order isn’t what you need, there are a number of options that might fit your situation better without resorting to cash. Some financial tools you can use to pay up without getting a money order include:

Cashier’s Checks

Cashier’s checks are similar to money orders. They’re signed by a bank representative and drawn from a bank’s account after the funds are transferred from your own. Cashier’s checks are available for larger dollar amounts, as long as you have the necessary funds, so they’re a better choice for large payments.

Personal Checks

Personal checks, while old-fashioned, are also a good alternative to money orders. Many billers and online sellers still accept personal checks, so you can use your checking account to pay bills and transfer funds. If you’ve been denied a checking account because of previous mismanagement, be sure to look into Chime’s second-chance banking features.

Wire Transfers

A wire transfer is an electronic transfer of guaranteed funds and is a good alternative if you need to send money as quickly as possible. As with a cashier’s check, you’ll often need to visit your bank or a store in person. Wire transfers are more expensive (about $25 to $40 in many cases) and more cumbersome, but they can’t be faked or canceled like money orders.

Electronic Payments 

Electronic payments of non-guaranteed funds are also an option. If you’re just paying bills, your bank’s online bill payment service can send funds almost anywhere — often for free. Online services and mobile apps can also send money at no charge.

Prepaid Debit Cards 

If you don’t have a bank account, consider using a prepaid debit card. These cards offer the convenience of plastic, but instead of being attached to a credit account, you load them with your own cash, typically online or at a variety of retail locations. It’s important to keep in mind that many of these cards come with a range of fees, so a traditional debit card linked to a checking account may be a better option.

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, keep the following in mind:

• Money orders are backed up 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 fields provided.
• Keep the receipt.