Money orders are considered a convenient and secure form of payment if you’re buying or selling an item. A money order looks like a check but is prepaid by the buyer, which makes it safer than a personal check.
Learn when to use a money order, how to fill one out, where to buy one, how much it costs and how it works. If you need to pay for an item with something other than a personal check, consider using a money order to reduce the risk of check fraud.
How Money Orders Work
When you buy a money order you prepay with cash, a debit or credit card or even a traveler’s check. Once you buy the money order you must fill in your name and the payee’s — and in some cases, your address and phone number. You will get a receipt; keep it until the money order is cashed because it contains a tracking number in case the money order is lost or stolen.
Where to Buy Money Orders
You can purchase a money order online but there is a plethora of local companies and financial institutions where you can buy one, too. Here are some places you can purchase money orders:
- U.S. Postal Service
- Western Union
- Banks and credit unions
- Convenience stores
- Grocery stores
- Checking-cashing centers
When to Use Money Orders
You can use a money order for a number of transactions from paying bills to purchasing something from a private party who doesn’t want to accept a personal check. If you don’t have a checking account you might use money orders to pay your rent or utility bills.
Or, if you’re buying something like a piece of used furniture from someone who doesn’t want a personal check, you might purchase a money order. Because money orders aren’t available in amounts greater than $1,000, you would typically use one only to pay for something up to that value unless you want to purchase multiple money orders.
Money Order Fees
You’ll pay a money order fee up front when you purchase one. Typically, the fee depends on the amount of the money order.
For instance, the U.S. Postal Service charges $1.20 for money orders up to $500 and $1.60 for those up to $1,000. You can get a money order from Wells Fargo and Chase for $5, regardless of its amount.
At some banking institutions, you can have the fee waived if you’re a customer with a certain type of account. Check first with your bank to see if you qualify for free money orders.
Money Order Benefits
A money order is a cash alternative that reduces the possibility of theft and fraud. In the event that your money order is stolen or lost, you can cancel it and have it reissued for free.
Mailing a money order to someone instead of cash is a much safer way to go — and you’ll have a receipt that proves you sent the money to the person. In addition, if you don’t have a bank account, using money orders is a fairly inexpensive, secure way to make payments.
How to Fill Out a Money Order
After you have purchased a money order, you’ll need to fill out the money order form with some information:
- Fill in the “Pay to the Order of” line with the name of the person or business you wish to pay.
- Fill in your name in the appropriate section, which will be labeled as one of the following: “From,” “Purchaser,” “Sender” or “Remitter.”
- Sign the front of the money order in the appropriate section, which will be labeled “Purchaser, Signer for Drawer.”
- If there are fields labeled “Address” or “Phone Number,” you might be required to fill them out.
- In the “Memo” field, you have the option to indicate what the payment is for.
- Leave the back of the money order blank so that the recipient can endorse it with his signature.
As for how and where to cash a money order, the answers are simple: You can generally cash a money order at the same places where you would purchase them. A retail, grocery or convenience store, a dedicated check-cashing store, and even your bank are among the places where you can turn in the money order to get cash.
You’ll need to provide ID, and you might need to pay a fee for the service. After supplying those items plus the money order, you’ll be given cash in the amount specified on the money order.
A post-office money order is the only kind you can get cashed at a post office location; the U.S. Postal Service will not cash money orders issued by other retailers. If you need to send a money order to someone, you might consider buying it at the post office because you can also mail it out to your recipient from there. Otherwise, you might need to send the money order to another location owned by the seller you’re buying it from — for example, Western Union or MoneyGram — and your recipient can pick it up from that company’s nearest location.
If a money order is lost or stolen, you might be able to get it replaced for a fee. You must report the stolen or lost money order to the seller, who will take you through the process of getting it refunded or replaced.
Ruth Sarreal contributed to the reporting for this article.