Money Order

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Last Updated:January 22, 2024

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What Is a Money Order?

A money order is issued by a banking or government institution that allows the person to whom it is given to receive the amount of cash stated on the paper. These are similar to prepaid checks.

If you are purchasing a money order, you must provide the recipient's name, and the financial institution's name issuing the money also has to be on order.

Having both the recipient's name and the issuing financial institution's name on the order makes it difficult for fraud, making it safer than cash. These are usually capped at the value of $1,000 though some locations may cap them at a smaller amount.

These orders can not be purchased online because it is difficult for the order issuer to verify the purchaser's identity and payment method over the Internet. When you purchase a money order, it has to be prepaid. This means you have to pay the face value of the order, along with the issuer's fee.

Sending a money order out is easy. You can send it out through the post office or give the order to the person.

Key Takeaways

Money orders are a safer alternative as opposed to carrying cash and checks.
Sometimes when you use personal checks or cash, you are put at risk, especially with checks having personal information on them.
They are available at several places. Banks, credit unions, and other locations provide them.
Not all locations that you can purchase orders from allow you to cash them out there
A fee is required to purchase order; the fees vary from place to place
You can securely send up to $1,000, along with the fee the location requires. However, some locations can cap the amount you want to put on the order
You can purchase more than one order at the same location
International orders are a quick and inexpensive way to send funds overseas or across borders safely

Advantages and Disadvantages Of Money Order

Money orders, which are essentially government or bank-issued equivalents of checks, are a secure substitute for cash or personal checks. It is possible to cash or deposit a money order into a bank account.

Using a money order instead of a personal cheque can be safer in some circumstances. In addition, the sender of a money order has to pay an extra cost and complete tracking papers in order to find out if the money order has been cashed.

Depending on the situation, money orders and checks seem like safer alternatives when going against each other.

Here are some of the advantages and disadvantages.

Advantages

The individual the order is intended for can cash the order at a credit union or a local bank.
Individuals can have the order issued in one country and cashed out in another.
Unlike checks, they do not include personal information like routing numbers and banking numbers. This makes it safe to use as it avoids any fraud happening if it ends up in the wrong hands.

Disadvantages

Cashing the money order may incur a fee.
Delays in receiving the money are possible.
They have a maximum purchase.
Some can be fraudulent when receiving them from individuals you do not know.
They might not be convenient for some people because you must purchase them in person.

Many questions about the safety of money orders. They provide protection for both parties, the recipient and the purchaser. This is because these orders can not bounce, and the purchaser can track the order to ensure it is in good hands.

Though this is true, some orders can be used fraudulently. So with that being said, the purchaser needs to hold on to their order receipt until the recipient has cashed the payment.

Where can you get Money orders?

Doing your research on where to get the orders is necessary because the fees and limits for the orders vary by location, and it is crucial to know this information.

Various locations and their fees:

Banks or credit unions
- Fees vary; they are typically around $5
Any U.S post office location: You will be able to get an order if you have a traveler's check, money, or debit card
- For amounts ranging from one cent to $500, the fee is $1.45
- For amounts ranging from $500.01 to $1,000, the fee is $1.95
Majority of 7-Elevens
- Fees depend on the location. However, they typically range from 1% to 3% of the value of the order.
Walmart: You can pay for the order using cash or debit
- Fees vary by location. However, they are usually $1
Publix: They have a limit of $500, and they only sell orders; they do not cash them
- The fee is typically 99 cents
Kroger: Typically has a limit of $1,000, but this varies by location
- The fee typically ranges from 84 to 88 cents, but this also varies by location

Things to know before getting a money order

There are plenty of things to know before getting this order to avoid complications.

If you plan on getting an order, it is important to be aware of these things:

You can purchase more than one at a time
If you purchase more than $3,000 in money orders in one day, it is required that you fill out a form as well as provide a government-issued photo ID.
Orders can be sent out internationally. However, the limits may vary at each location.
Some locations allow you to obtain an order; however, they might not allow you to cash it at that location, so it is important to do research before going.
If you need to get a military money order, you can get one at an APO/FPO/DPO location.

How to fill out a money order? Just like paper checks, these require specific information to be written on them.

Empty spaces are provided for you to fill out these details:

Recipients name
Recipients address
Date of purchase
The amount the purchaser is paying the recipient
Purchaser's name and address
Payment reason
Purchaser signature

Filling out the order correctly is crucial because it might be difficult to correct the mistake, so you must be careful when filling it out.

These are not as standard as other forms of payment. However, it is reliable when a guaranteed form of payment is needed. In addition, they are widely available and a low-cost alternative to additional payments.