What Is A Money Order? How Does it Work?

As an alternative to cash or card, money orders are one of the safest form of payment! So you may be asking, what is a money order? Money orders are similar to a check in that they are both printed forms for payments of a specific amount from your financial institution. Money orders are more advantageous because they can be more easily tracked and canceled.

Additionally, all the information, such as the recipient is listed out which makes loss or stolen money less problematic. You can also get an Money Order at convenience stores to retailers. Check out our Bank Bonuses, Saving Rates, and Credit Card Bonuses!

How Money Orders Work

Money orders operate very closely to checks. Like a check, all you have to do is enter the name of the person you are sending money to with the amount. The difference is that money orders also have a maximum limit of $1,000 so you would need to send more than one to exceed that limit.

Money orders do not have any fees for the payee, but may have additional costs for the issuer. Be sure to contact your customer service representative to know what you are paying for when you fill one out. Typically, most financial institutions will charge a convenience fees to issue money orders.

Features

Advantages and Disadvantages

While both money orders and checks are both ways to send a specific amount to a friend or family member, they both come with their own advantages and disadvantages.

Pros. 

• Can also be deposited into a bank account, for no fee.
• Do not include personal information, such as your bank’s routing number and your bank account number.
• Can be issued in one country and be cashed in another country.
• The recipient can cash the order at a local bank or credit union—there’s no requirement to go to the issuer to have it cashed.

Cons.

• Can incur a fee when cashed.
• More difficult to track than a personal check.
• Can be fraudulent; be wary about receiving them from people you don’t know.
• There may be a delay in getting the funds if they are cashed at a bank other than the issuer.

How to Buy a Money Order

1. Head to a financial institution, a retailers, or convenience store to transfer your funds from your savings or checking accounts
   • You will also need to add the amount of money you want to send.
2. Pay the total amount of money you want to send as well as the fees.
   • Most money orders may have a $1,000 maximum.
   • If you want to send more, you will need to pay for multiple money orders.
3. Keep the receipt to track it and cancel it if needed!

How to Cancel a Money Order

If you accidentally lose your money order it’s okay!

Follow these easy steps to cancel your money order and get your money back:

• Contact the issuer or the place where you bought your money order. If that’s a postal order, go to your local post office. If you bought it at a bank, return to the bank.
• Give the issuer your details. Check your money order receipt for the purchase date, amount, and location. In addition, you may be asked to provide a brief description of how the money order was lost.
• Attach a copy of the receipt. This is important as proof of purchase.
• Submit a cancellation request form. Most of the time, you will have to pay a fee associated with the cancellation form request.

When Should I Use a Money Order?

Although money orders are one of the safest forms of payment, they are sometimes risky because they aren’t as commonly accepted as checks. When deciding which one to use, these are scenarios where it is better to use a money order :

• Send a payment more securely. They don’t include your bank account number.
• You’re mailing money. Only the recipient can use it, unlike mailing cash.
• You’re sending money internationally. U.S. Postal Service can send them to about 30 countries.
• You don’t have a checking account and need to pay bills. The money isn’t tied to any bank account and can be sent to other people.
• Worried about bouncing a check. They can’t be rejected for insufficient funds because they are prepaid.
  Another option: A certified check or a cashier’s check, both of which guarantee payment and don’t necessarily have a $1,000 limit, unlike many money orders.

Author’s Verdict

Money Orders are a great form of payment if you want to ensure the safety and integrity of your transaction. Be wary, because they may come with additional fees at many common retailers. At Bank Deal Guy, we have all these guides for you to be able to manage your money better! We strive to create content that will help our readers achieve their financial dream.

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