- A money order is like a check you can buy with cash — it’s a secure way to send or receive money.
- You can buy a money order from a bank or credit union, some grocery stores, the post office, and directly from sellers like Western Union and MoneyGram.
- A money order is more secure than a personal check, and also provides a paper trail should a payment ever come into question.
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Have you ever seen a commercial that said to “send check or money order”? Maybe you’ve noticed signs at the customer service desk at your local grocery store or post office and wondered: What is a money order? You’ve come to the right place. Keep reading to learn about money orders, including how they work and why you may want to use one.
What is a money order?
A money order is a financial instrument that allows you to move funds. In many ways, a money order is like a check you can buy with cash. Once you have the money order in hand, you can use it to make a purchase or send someone else funds.
In many ways, money orders work like Venmo without the internet.
While you probably won’t use money orders often, they can be extremely useful in certain situations, particularly if you don’t have a regular checking account or need to send guaranteed funds.
How does a money order work?
Money orders are typically bought with cash and then treated like a paper check from a bank account. You can buy them from several places (more on that below) including banks and post offices.
Money orders are issued through partnerships with major providers like Western Union and MoneyGram. When buying a money order, plan to pay with cash, or sometimes debit, including a fee that is typically around $1 to $5 per money order.
Most money orders have a limit of $1,000. If you need to move more than that, you’ll probably need a cashier’s check instead.
After your money order is printed, you can fill in the payee and sign it, just like a check from your own personal checkbook. The recipient will then endorse the back and deposit it like a check in their bank account, or cash it.
Because the money order is prepaid and coming from a trusted entity like Western Union or MoneyGram, there is virtually no chance it will bounce like a regular check. That is why a money order is often considered a more secure payment method than a check. Money orders also leave a paper trail that can act as proof of payment or proof of funds in the event of a future dispute.
Be sure to keep your receipt when buying a money order. If your money order is lost, you can generally get it replaced if it hasn’t been cashed or deposited.
When to use a money order
Most people won’t want to take the extra time and expense of using a money order to send funds to family or friends. You can usually do that with your checking account or an online payment app for free. Money orders are best for purchases where you don’t know the other person well.
For example, many landlords require a money order for the first month’s rent or after receiving a bad check. Unlike a personal check, the landlord can trust with nearly 100% confidence that a money order is good, as long as it’s not fraudulent.
Money orders could also be good for large person-to-person purchases. If you are buying a car on Craigslist or another marketplace, the seller may want payment with cash or money order to ensure they actually get paid.
A money order can also give you a little more privacy than a personal check, as it doesn’t contain your full address or other personal information. They are safer to mail than cash, which also makes them popular for remote purchases that don’t take place online.
Money order alternatives
Money orders were a popular way to pay for many years, but competing online products and other money order alternatives make them less common these days. Here are some alternatives to money orders to consider:
- Cash: While you might use plastic most of the time, good old cash is still a trusted payment method for many purchases.
- Online payment: Online payments using services like Venmo, Cash App, PayPal, Zelle, Google Pay, Apple Pay, and even Facebook Messenger offer options to connect to a bank account and send money to someone else using your phone or computer.
- Personal check: Personal checks don’t offer privacy for the buyer or guaranteed funds for the seller, but they are usually free to use with any regular checking account.
- Cashier’s check: A cashier’s check is even more secure than a money order and can be purchased with higher limits. However, there’s usually a higher cost and you can generally only get them from a bank or credit union.
Where to buy a money order
If you’re ready to buy a money order to move into a new apartment or for any other reason, here are some places you can generally get one:
- Post office: The United States Post Office offers USPS money orders. They cost $1.25 for up to $500 or $1.70 for up to $1,000. International money orders are available for up to $700 at a cost of $9.50. Military money orders are $0.45 each.
- Walmart: Most Walmart stores sell money orders at either the Walmart Money Center, if available, or the customer service desk. They cost up to $0.88 each for up to $1,000.
- Grocery store: Many grocery stores and convenience stores offer money orders for sale. These range in price based on the size and where you buy them. Many sell money orders for around $1 to $3 each.
- Bank or credit union: Nearly any bank or credit union with branch locations offers both money orders and cashier’s checks, but some only sell them to bank customers. If you buy one from a financial institution, you’ll usually pay around $5 per money order.
What to do if you’ve been given a money order
If you have a money order and don’t know what to do with it, you have a few options to get cash or add it to your bank account.
The easiest option for most people is to deposit the money order in your bank account using your phone. Just like any other check, you can snap a picture to deposit it to your checking, savings, or another account. If you’re not into mobile banking , you can also deposit it at an ATM or with a teller.
If you want to get cash for a money order, the best option is to take it to the issuer. Your bank may also be willing to cash a money order. Beware check-cashing services, as they charge extra to give you cash for your money.
Money orders are a trusted way to move funds
There’s a reason many landlords ask for a money order after signing a new tenant or when a check is returned due to non-sufficient funds. They are cheap, offer guaranteed funds, are easy to buy, and are almost universally accepted.
If you’re looking for a safe and secure way to move funds without a bank account or an online app, money orders are one of your best choices. They are a safe, secure, and inexpensive way to facilitate a trusted and successful transaction.
Eric Rosenberg is a finance, travel, and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full-time. He has in-depth experience writing about banking, credit cards, investing, and other financial topics, and is an avid travel hacker. When away from the keyboard, Eric enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and little girls. You can connect with him at Personal Profitability or EricRosenberg.com.