money orders

What Is a Money Order and How Does It Work?

Money orders provide a way to make payments without carrying or transferring cold hard cash. They also come with a few extra security benefits which cash and checks lack. But how do they work? Where can you buy one? And how do you know if they’re the right option for your needs?

Read on to learn everything you need to know. Plus, find out an alternative way to transfer money, even without a bank account.

What is a money order?

A money order is a printed order, similar to a check, used to make a payment of a specific sum to a named recipient. However, they are more reliable than checks, because they are paid for in advance.

Where can I get one?

Now that you understand how money orders work, you’re ready to buy one. Fortunately, you won’t have to go far. You can purchase them at:

  • Post offices.
  • Banks.
  • Credit unions.
  • Retail stores, pharmacies, and convenience stores (e.g. Wal-Mart, CVS, Kroger, K-Mart, Rite Aid, 7-Eleven, Meijer, Family Fare, and more).

The locations listed above don’t always offer money orders, so it’s smart to call and check before visiting. If you’re scoping out a retail store in person, look for the Western Union or MoneyGram logo.

How much does it cost?

The cost depends on where you buy it, but can range from $1 to $10. Here’s an estimation of the costs from various purchase locations:

  • Retail stores: Up to $1.
  • Post offices: $1.20 to $1.60, depending on the amount.
  • Banks and credit unions: $5 to $10.

You can often find the best deal at retail stores, followed by post offices, and then banks and credit unions.

Do money orders have a maximum face value?

Each issuer sets their own limits on the maximum face value that you can purchase. For example, the United States Postal Service (USPS) and Wal-Mart both set their limit at $1,000. Most limits range from $500 to $1,000.

How do I purchase a money order?

Money orders can be purchased from participating locations using cash, a debit card, or a traveler’s check. Some locations may accept credit cards by processing the purchase as a cash advance.

To make the purchase, simply ask the cashier for a money order and specify the amount. Keep in mind, limits apply and may vary from one location to the next. You will also have to pay the store’s or institution’s fee for the money order.

How do I write a money order?

Filling one out is quick and easy. You’ll usually need to include the following:

  1. The recipient’s name. Ensure that it’s spelled correctly to avoid any problems when the recipient goes to cash it.
  2. Your address (as the purchaser).
  3. The account number (if you are making a payment to an account).
  4. Your signature.

That’s it! Generally, you can leave the back of the money order blank, as that’s where the recipient will sign.

Note: Money orders typically have a detachable receipt. Keep it, as it will enable you to track the money and confirm when it’s deposited. 

What are the recommended uses of money orders?

They’re often used to send payments by mail or to pay recipients who prefer not to handle cash. They can be especially helpful for people who don’t have a bank account and are therefore unable to write checks.

Are money orders safe?

Relatively speaking, yes! They’re safer than cash or checks because you can track and/or cancel them when needed.

For example, if your recipient loses your money order before they can cash it, you can cancel it to avoid losing the money. Further, if it gets cashed by someone who is not the recipient, you can find the details of where it was cashed and report that info to the police.

So money orders are relatively safe. Of course, they are not the safest option available — electronic money transfers remove the risk of loss or theft entirely. But when electronic transfers aren’t an option, money orders are a viable solution.

How can I find a money order near me?

Check with your post office, bank or credit union, or local stores like Wal-Mart or CVS. We recommend that you shop around a bit to find the best deal near you.

How else can I transfer money?

Modern technology can make payments even easier. There are now money transfer services which allow you to send money online, even if you don’t have a bank account. Turnaround times are as fast as same-day, and the costs are competitive.

To find out if a money transfer service can simplify your payments, browse the leading companies below.