When you need to make or accept payment but cash, check, and electronic transfers don’t fit the bill, a money order is a secure and convenient solution. A money order is essentially a paper check that can’t bounce because it’s prepaid. You can buy one at any U.S. post office, or at Western Union or MoneyGram outlets such as those found inside supermarkets, pharmacies, and other grocery and convenience chains. Most banks, credit unions, and check-cashing stores offer money orders as well.
Key Takeaways
- Money orders offer an easy way to exchange funds safely when paying in cash isn’t practical, using a personal check isn’t accepted or desirable, or a non-digital payment is required.
- Money orders are written directly to a specific party and requires endorsem*nt to be cashed.
- You can get money orders at many places, such as the post office, most banks, and Western Union outlets at CVS, Walmart, and 7-Eleven stores.
- Although money orders are generally inexpensive, they almost always involve a purchase fee and sometimes a redemption fee for the recipient.
- Money orders are an attractive tool for fraudsters, so it’s important to check the visual security features on any money order you receive.
When Should You Use a Money Order?
For situations in which paying with cash, check, or a digital app isn't ideal—or even viable—a money order might be the best answer. Like a check, money orders are written directly to individuals or companies by name, requiring endorsem*nt and identification to cash them. This makes money orders much more secure than cash, protecting the funds in case of loss or theft.
Money orders played a key role in U.S. history. During the Civil War, thieves would rob post offices and delivery runs to grab the cash being sent all over the country. Abraham Lincoln’s postmaster general at the time came up with a solution: money orders.
Although personal checks offer similar security benefits, money orders have the advantage of being prepaid. Assuming you have a legitimate money order, accepting it as a form of payment is free of risk because the sender has already provided the funds.
By contrast, a personal check is accepted in good faith that the sender’s bank account has sufficient funds or overdraft protection to cover the check. If not, the payment bounces, and the recipient is left short—and often pays a bank fee on top of that.
The advantages of money orders over cash and check make them preferred or even required in many situations, such as when:
- The recipient isn’t comfortable trusting a personal check due to a lack of familiarity with the sender or bad past experiences with previous payments.
- The sender doesn’t want to reveal their address or checking account number.
- It’s crucial to make the payment without any risk of being rejected for insufficient funds.
- The payer doesn’t have a checking account, and cash isn’t practical.
Certified and cashier’s checks are potential alternatives. But banks generally charge higher fees for the added security. And you have to go to a bank during banking hours to obtain them, offering fewer time and location options. So if a money order can handle the job, it can be a more flexible and economical choice.
Where Can You Buy Money Orders?
When you’ve decided on a money order, the next decision is where to pick one up. Though online providers are emerging, money order purchases are still mostly a paper and in-person industry. But it probably won't be difficult to find a money order location near you.
Money orders can be bought or redeemed at many locations in the United States, including post offices, CVS, and Walmart, and Western Union and MoneyGram outlets inside tens of thousands of 7-Eleven, Publix, Kroger, Meijer, and other retail locations. Most bank and credit union branches also offer money orders.
Every money order comes with a detachable stub or receipt that allows you to track it after it's delivered or sent.
As with any other consumer purchase, you’ll be wise to pay attention to pricing because not all money order sellers charge similar fees. Walmart is one of the cheapest options, charging a maximum of $1 per money order. As of March 2024, the U.S. Postal Service charges either $2.10 or $3 per money order, depending on whether the amount is above or below $500.
Pricing at other locations can vary greatly, so it’s best to check in advance. For instance, going to a bank or credit union where you are a customer could mean you’re able to buy money orders for free, or you may instead find the cost is $5 or $10 unless you’re in the highest checking account tier.
Another consideration is how many money orders you will need because the value of each one is typically capped. For example, USPS caps the maximum value of a money order at $1,000. So if, for instance, you need to pay $2,500, you’ll need three money orders. Here again, knowing the fees in advance is useful.
Be aware that buying a money order with a credit card is treated as a cash advance. So even if a money order seller offers to purchase by credit card, we recommend paying with a debit card, cash, or a bank account withdrawal to avoid finance charges on your next credit card statement.
Money Order Scams
One downside of money orders is that they are susceptible to fraud and have become a common deception vehicle for thieves. In response, money order design has evolved to include a multitude of security and anti-counterfeiting features. From watermarks and security strips to rainbow ink patterns and UV-light features, look for the multiple indicators that can tell you whether a money order is legitimate or not.
If you are ever in doubt about a money order, note the issuer (the U.S. Postal Service, Western Union, and MoneyGram are the three biggest) and research the specific security features it should include. You can also call the issuer to help determine if the money order is authentic.
If someone pays you with a money order for more than the requested amount and asks you to pay them back the difference, beware! This is a common scam of money order fraudsters.
How to Fill Out a Money Order
Though the requirements on how to fill out a money order vary from one institution to another, the information you'll fill in on a money order is generally the same. Clearly print the name, and use ink. As soon as you purchase a money order, fill in this section immediately. This is important because if the money order is lost but still has this field written in, it may make it more difficult for someone else to fraudulently use the money order.
Then, fill in your information. On the "from" or "purchaser" line, write your name and address or other identifying information. This is important in case there are any issues or questions about the money order. This information may also be used if the money order has to be returned to you.
Third, add any necessary account or reference numbers. If you are paying a bill or making a specific purchase, write any necessary account or reference numbers in the memo or account number field.
To prevent error or confusion, write the exact amount of the money order in both numbers and words in the "amount" or "dollars" field. Then, sign your name in the purchaser's signature field. This is required to validate the money order and make it official. Before you send the money order, detach the receipt and keep it for your records. This receipt can also help you track the money order to make sure it was actually received.
$1,000
The maximum amount in which a single money order can typically be issued.
How to Cash a Money Order
If someone pays you with a money order, you have two options for converting it into funds:
- Take it to a location that redeems money orders (bank, post office, Walmart, grocery store, etc.) to receive its value in cash.
- Sign the back and deposit it in your bank account like a check.
Both methods have potential drawbacks.
Converting it to cash offers the quickest access, and if the money order is later determined to be counterfeit or fraudulent, you may personally escape that problem.
However, redeeming money orders isn’t as convenient as buying them. For instance, some convenience stores sell money orders but don’t cash them. And though post office locations will cash money orders in theory, if your money order is large and the post office is in a small market, they might not have enough cash on hand to redeem it.
Cashing it in could also involve a fee. Your best bet is to redeem a money order with the same provider that issued it. So take a postal service money order to a post office, a Walmart money order to Walmart (WMT), and so forth. This way, you’ll likely avoid any redemption fees. Just as with buying money orders, though, it will pay to call ahead to first verify that a location can honor your redemption and ask if any fees will apply.
The alternative is to deposit the money order into your bank account as you would a check. This offers the advantage of safely adding the payment to your bank balance, rather than walking away with a large sum of cash you may not physically want or need.
Be forewarned, though, that depending on your bank, depositing a money order may not be as easy as depositing a check. Although you may be accustomed to making mobile bank deposits with your smartphone, some banks don’t allow electronic deposits of money orders; instead, they require you to come into a branch. And if your bank is an online-only institution, it may not accept money order deposits at all.
Whether you decide to turn your money order into cash or take it to your bank, be sure to bring a photo ID with you, and don’t endorse the money order until you’re at the counter with a clerk or teller who will accept it.
How to Replace Lost or Stolen Money Orders
Because money orders take physical form, it's sometimes easier for them to become lost, stolen, or damaged. There are certain steps you can take to replace money orders if they don't quite make it to their intended recipient. Money order losses or theft may take up to a month to make sure it has been lost. Though you can't stop payment on a postal money order, you can replace it.
Should a money order be lost or stolen, contact the issuer of the money order. Provide the post office, bank, or retail location where you purchased it. Provide them with the details of the stolen money order such as the serial number and the amount. As appropriate, ask them to put a stop payment on it.
If you think the money order has been stolen, it is also a good idea to file a police report. Not only can this help you recover your money, it may assist law enforcement in catching the thief and prevent similar cases from occurring to other individuals.
After taking those two steps, you must keep a close eye on your bank and credit card accounts to make sure that no unauthorized transactions have been made. If you notice any suspicious activity, report it to your bank or credit card company immediately. Also, remain in contact with the issuer, as you may need to take action to ensure your money is returned to your account.
Advantages and Disadvantages of Money Orders
Pros of Money Orders
Money orders have the advantage of having greater security and accessibility compared to other forms of payment. As discussed above, money orders are a secure way to send or receive money as they are prepaid and can be replaced if lost or stolen. Because they are prepaid, recipients of money orders can be assured that the funds are available and will not bounce.
Money orders have the advantage of being fairly easy to obtain and use. They orders can be used by anyone, regardless of whether they have a bank account or not. They're also a more accessible form of payment because they are usually inexpensive compared to other forms of payment such as wire transfers or cashier's checks.
Money orders do not require the disclosure of any personal financial information. This makes them a good option for people who value their privacy or do not want to disclose select information. Money orders are also borderless and can be sent internationally, making them a great option for those looking to send or receive money across borders.
Cons of Money Orders
Money orders are not suitable in all situations as there are some downsides. Mentioned above, money orders usually have a maximum amount limit. This means that if you need to send or receive a large sum of money, you may need to purchase multiple money orders which can be inconvenient or incur additional fees.
On that note, money orders can come with fees. These charges can vary depending on the amount and the location where you purchase them. Money orders can also take substantial time to process and cash compared to other forms of payment that rely on more electronic-forms of financial transfers.
Like other financial instruments, money orders are not without potential fraud or scams. It is possible for you to lose the money you sent if an unintended bad actor obtains the money order. Partially for this reason, some businesses or institutions may not accept money orders or may make it difficult to cash.
Pros
Safer than cash from theft or loss
Can’t bounce like a check for insufficient funds because the amount has been prepaid
Cheaper than a bank's certified or cashier’s check
Do not require the use of a bank account
Can be sent or received from around the world
Cons
Requires an in-person visit to a money order dealer
Requires you to pay a purchase fee, unlike personal checks
Not allowed for mobile deposit by all banks
May be inconvenient to cash due to fraud protection measures
What's the Maximum Value Available for a Money Order?
Most issuers set a limit of $1,000 for a single money order. For larger amounts, you'll need to get a cashier's check or buy multiple money orders.
Who Cashes Money Orders?
Most banks accept money orders, as well as some grocery stores, pharmacies, and money transfer services like MoneyGram and Western Union. Be aware that just because a facility issues a money order doesn't mean they will cash one. Check your location's policies before you go there.
What Can I Do If a Money Order Is Lost or Stolen?
Generally, money orders are treated the same as cash. However, they do have a receipt attached. Depending on where you purchase your money order, there may be some recourse. Check with the issuing body to find out.
Do Money Orders Expire?
Money orders don't have expiration dates per se, but if they are older than a year, the issuing body may charge fees to cash them. If they aren't cashed for many years, they may fall into the unclaimed property category.
The Bottom Line
From their origins as a safe way to transfer money during the Civil War to their current status as a convenient tool for those without a bank account or a need for certified funds, money orders have become a staple. Though money orders are fast and convenient, buyers may need to shop around to get the best prices. When receiving a money order, keep in mind that these are financial instruments that are considered the same as cash. Keep them safe or cash them out as quickly as is feasible.
