What Is a Money Order? | Capital One (2024)

June 27, 2023 |6 min read

    Money orders may seem outdated in a world of apps, online banking and instant cash transfers. But there are still times when a money order might be necessary.

    So what is a money order? It looks and functions like a traditional check in some ways. But there are key differences.

    Key takeaways

    • Money orders are sometimes used as alternatives to checks and cash.
    • Because money orders are prepaid, they’re guaranteed.
    • Money orders may be available at locations like banks, convenience stores and post offices.
    • The fee to purchase a money order might range from $1 to $5.

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    How do money orders work?

    When you buy a money order, you fill it out with the recipient’s name and the amount to be paid. You then prepay the full amount for the value of the money order, plus a small fee. The recipient can cash or deposit the money order just like they would a check. In some cases, there might be a fee for cashing the money order.

    Money order limits to keep in mind

    Depending on where you purchase your money order, you may be limited to an order of $500 or $1,000.

    For example, the Postal Service sets a $1,000 limit on domestic money orders and a $700 limit on international money orders. Purchasing multiple money orders to cover larger amounts might be a way to get around the issue. So could a cashier’s check, which doesn’t typically have a limit.

    When you can consider using a money order

    With so many payment options available today—from checks to online apps and cash—you may be wondering when it’s worth considering a money order. They can work as an alternative to cash and checks because money orders don’t require either party to have a bank account. So here are some circumstances when a money order may be helpful:

    If you don’t have a bank account

    Because you pay for a money order with cash, it can be a good alternative payment method if you don’t have access to paper checks. But remember, there are typically fees.

    If you’re sending payments through the mail

    Unlike a check, a money order doesn’t contain sensitive information like account numbers or routing numbers. And unlike cash, a money order can only be used by the recipient. So you might feel more comfortable with a money order if you need to send money by mail. Plus, if you keep the money order receipt, you can use it to track your payment.

    If you don’t want to wait

    Paying with a money order can save you the trouble of waiting for a check to clear and post to your bank account.

    Where to get a money order

    You may be able to buy money orders at:

    • Post offices
    • Banks
    • Convenience stores
    • Credit unions
    • Money transfer services
    • Drugstores
    • Grocery stores
    • Big-box stores

    How much is a money order?

    Money order prices differ depending on where you buy them. Fees for money orders are usually based on the money order’s dollar amount and are typically between $1 and $5.

    How to pay for a money order

    You can typically pay for money orders using cash or a debit card. Because issuers often want the cash upfront, they may not accept a personal check or credit card.

    Even if a credit card is accepted, your card issuer could consider it a type of cash advance. And if it does, you generally will pay a fee for it and may be charged interest from the transaction date. Plus, if the added balance of a cash advance sits unpaid for a while, it could also hurt your credit scores. Check your credit card agreement to see what types of transactions might be considered a cash advance.

    How to fill out a money order

    Money orders may look different depending on where they’re purchased. But generally, filling one out is similar to filling out a check.

    Each one comes dated and with the amount printed on it. Then, you fill out the payee’s name, your name, your address and your signature. You can also write notes to yourself in the memo section about what the payment is for or anything else.

    Money orders usually come with receipts that include the serial number, so you can track and confirm the payment’s delivery.

    How to cash or deposit a money order

    If you convert the money order to cash, you may be able to avoid fees by taking it to the provider that issued it. For example, the Postal Service says you can cash its money orders for free by visiting a post office. If you go to a check-cashing store to cash a money order, there may be a fee.

    Depending on the bank, you might also be able to deposit your money order. But you may have to visit a physical location to do it.

    How long is a money order good for?

    Money orders generally don’t have expiration dates. But sometimes, there might be a charge to cash them if you wait too long. The back of your money order may have more information.

    What to do if you lose a money order

    If you lose your money order, the funds aren’t necessarily gone. Your next steps may vary.

    Contact the issuer as soon as possible. Some issuers may be able to stop the payment. Others might investigate and replace the money order if it’s confirmed lost or stolen. A replacement may come with a processing fee.

    If you think the money order was stolen, you may also consider filing a police report.

    Money order scams to be aware of

    Like any form of payment, money orders can be subject to scams.

    The Postal Service—among other issuers—designs money orders to prevent fraud, so they are marked with distinct designs that can be seen when held up to the light.

    You can also consider the amount of the money order. Typically, the Postal Service’s limit is $1,000, so if it’s in an amount larger than that, it may be fraudulent. Check for a discolored dollar amount too. That could be a sign that it’s been erased, which can indicate fraud.

    If you think you’ve received a fake money order through the post office, you can verify your money order by calling 866-459-7822. You can also report potential scams to the U.S. Postal Inspection Service.

    Alternatives to a money order

    Money orders can be useful, but they may not be right for every situation.

    Cashier’s check

    Cashier’s checks are another way to make payments with guaranteed funds. With a cashier’s check, money is taken directly from your checking account, which usually means you need an account with the issuer and enough money to complete the transaction.

    Typically, a cashier’s check is a popular alternative for larger payments where personal checks and cash may not be an option. They are issued and signed by a financial institution representative. So not only are cashier’s checks guaranteed, they’re also widely accepted and safe.

    Wire transfer

    A wire transfer is an electronic transfer of funds from one bank, credit union or financial services company directly to another. It allows people in different locations to exchange money without cash or a check. You have to pay for the transfer upfront and provide information to the institution, like the recipient’s name and bank details.

    Generally, domestic wire transfers take one to three business days, while international wire transfers can take two to five business days. They may come with a fee, depending on the bank.

    ACH transfer

    Like a wire transfer, an ACH transfer is a type of electronic payment. It’s used for things like direct deposits, online bill pay and more.

    ACH transfers are processed through the National Automated Clearing House Association and are regulated by the federal government.

    Money orders in a nutshell

    Money orders may not be the most popular option to pay or receive money, but they are widely accepted. Because they’re guaranteed, money orders can be a good idea when sending money through the mail.

    If you’re interested in learning more about money orders, other secure payment options and other ways to protect your accounts, you can check out more privacy and security articles from Capital One.

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    Greetings, fellow financial enthusiasts. As someone deeply immersed in the realm of financial transactions and payment methods, allow me to dissect the intricacies of the article you've presented. I am well-versed in the nuances of money orders and can provide valuable insights into their mechanics and alternatives.

    Money orders, despite seeming antiquated in our era of digital transactions, remain relevant for specific scenarios. These financial instruments share similarities with traditional checks but have distinctive features that set them apart. One notable characteristic is their prepaid nature, which guarantees the amount specified on the money order. These instruments are obtainable from various locations such as banks, convenience stores, post offices, and more.

    When delving into how money orders work, it's essential to understand that the purchaser must fill out the recipient's name and the payment amount. The entire amount, along with a small fee, is then prepaid. The recipient can subsequently cash or deposit the money order, akin to a regular check, with the possibility of facing a fee for cashing it.

    Importantly, money orders come with limits depending on the purchasing location. For instance, the Postal Service sets a $1,000 limit on domestic money orders and a $700 limit on international ones. To circumvent these limits, one might resort to purchasing multiple money orders or considering cashier's checks, which usually do not have such restrictions.

    Now, let's explore when it might be prudent to use a money order. In the vast landscape of payment options, money orders become valuable under specific circumstances. They serve as alternatives to cash and checks, especially when neither party has a bank account. Here are some scenarios:

    1. Absence of a Bank Account: Money orders are useful when individuals do not possess a bank account, as they can be purchased with cash.

    2. Mail Transactions: Unlike checks, money orders do not contain sensitive information like account numbers, enhancing security for transactions conducted through the mail.

    3. Instant Transactions: Using money orders eliminates the wait associated with checks, providing a quicker means of payment.

    To acquire a money order, one can explore various locations, including post offices, banks, convenience stores, credit unions, and more. The cost of a money order typically ranges between $1 and $5, with fees determined by the money order's dollar amount.

    Payment for money orders is generally accepted in cash or through a debit card. Personal checks and credit cards may not always be accepted, and if a credit card is used, it might incur additional fees or be treated as a cash advance.

    Filling out a money order is a process akin to completing a check. While the appearance may vary, the common steps involve dating the money order, adding the payee's name, your name, address, and signature. Receipts with serial numbers are provided, allowing for tracking and confirmation of payment delivery.

    When it comes to cashing or depositing a money order, options include visiting the provider that issued it or using a check-cashing store, though the latter might entail fees. Banks may also accept money order deposits, often requiring a physical visit.

    Importantly, money orders generally do not have expiration dates, but delays in cashing them might incur charges. If a money order is lost, contacting the issuer promptly is crucial. Some issuers may stop payment, investigate, and potentially replace the lost money order, albeit with a processing fee.

    As with any financial instrument, money orders are susceptible to scams. Recognizing the distinct designs and features meant to prevent fraud is essential. Any suspicion of a fake money order can be addressed by verifying it with the issuer or reporting potential scams to relevant authorities.

    In conclusion, while money orders may not be the most popular payment option, their guaranteed nature makes them a viable choice, particularly for transactions via mail. Alternatives such as cashier's checks, wire transfers, and ACH transfers also exist, each catering to specific needs and preferences in the realm of financial transactions. For those seeking additional insights into secure payment options and ways to safeguard their financial accounts, exploring related articles from reputable sources like Capital One can be immensely beneficial.

    What Is a Money Order? | Capital One (2024)
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