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What Is a Money Order: All you need to know

The biggest barriers to using personal checks of cash include them not being accepted or them getting stolen. Therefore, using money orders may be a better option.
What Is a Money Order: All you need to know
A money order is an alternate option to cash and personal checks, money orders eliminate the risk of your money getting stolen.
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Money orders are simply documents that specify to whom the money is due. To certify that it is genuine, both you and the receiver need to sign the document. That is what makes it safe and theft-proof.

Benefits of using money orders

The biggest barriers to using personal checks of cash include them not being accepted or them getting stolen. Therefore, using money orders may be a better option. Some of the benefits include the following:

  • You don’t need a bank account: You do not need to have a bank account to create a money order.
  • They are highly secure: Money orders are valid only if they are signed by both the receiver and you. There are no bank details mentioned on it either.
  • Global acceptance: While not all instances may accept money orders, U.S post offices can send them to around twenty-five locations globally.
  • No more bounced checks: Money orders can never bounce. Since you have to pay in advance, you can rest assured that the transaction will happen as planned.
  • They are easy and straightforward: Money orders are extremely easy to create. Simply go to the provider, pay the amount, sign it, and get it done.

How money orders work

A money order becomes valid only when both the payer and the receiver sign it. To create one, you need to pay in advance. You can do this at places like US post offices, Western Union branches or Walmart stores. Also, most money orders do not permit you to pay more than $1,000. This way, if you want to pay $2,500, you will have to get two money orders for $1,000 each and one for $500. But do keep in mind that each money order will cost you a fee.

Also know about: international money

How much a money order will cost you

For every money order you make, you will be charged a small fee. This depends on where you’re getting it from. The table below lists the cost based on where you are planning on getting your money order from.

Money order providerCharges
US Post OfficesUp to $500 – $1.25> $500 to $1,000 – $1.70Postal military orders – 45 cents
WalmartLess than 88 cents
Credit Unions and BanksAbout $5, depending on the institution  
Money Transfer Agents (like Western Union)About $1, depending on the provider and location

While you can get domestic money orders from any of the above-mentioned providers, you can create international ones only at certain US post offices. These will cost you $10.25. Remember that there will also be a processing fee depending on which country you are sending the money order to.

You can Also see: money across banks

How to pay for a money order

In order to pay for a money order, people usually use cash or even their debit cards. But in case you are looking to use your credit card to pay for it, keep in mind that only a few providers give you this option. If you are planning on using your credit card, keep in mind that issuing banks usually consider credit card money orders to be cash advances.

This means you will be charged a fee plus an interest percentage. In most cases, you will end up paying more when you use your credit card than when you use your debit card or cash.

See also about: How to Transfer Money from Chime to Cash App Instantly

Where to cash a money order

You can cash your money order at any location or provider that will accept it. That said, the best place to encash it would be at the same place where it was originally made. Cashing it at other locations may attract additional charges.

See also about: How to cancel a money order

How to cash/deposit your money order

It is pretty straightforward. Simply go to the entity and present your money order. Do keep in mind that most of them will ask you to show some form of identification before giving you the money. Another alternative is to deposit it into your bank account. But before doing this, you need to sign behind the document.

How to deal with a lost money order

In case you lose your money order, you can get it replaced, refunded, or canceled. However, for this to happen, make sure that it has not been encashed. If it has already been cashed, you’ll have to file an official police complaint to claim your money. Keeping the money order receipt safe is vital. You will have to fill out some forms and pay a charge as well.

You can Also see: money across banks

How to track your money order

The receipt will help you track it online. Without it, it is tedious and expensive.

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Picture of Johnathan James

Johnathan James

With over 11 years of experience, Johnathan started his writing career as a copywriter. Coming from a finance and management background, he excels in covering financial topics. When he's not spurning out fintech content, you will find him playing football, basketball and racing.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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