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Money orders are a check-like form of payment you purchase with cash. The paper documents are considered a secure alternative to cash and personal checks—so much so that the U.S. Postal Service recommends using money orders when you need to send money by mail.
Recipients of money orders may find it reassuring that this paper payment can be instantly redeemed for cash and can't bounce like a check. As such, money orders are a fast and guaranteed form of payment. Here's how money orders work.
What Is a Money Order?
A money order is a piece of paper that provides a safe payment to a person, organization or business. Since money orders aren't attached to a checking account, you must purchase them with money upfront at your bank or through a service like Western Union, MoneyGram or the U.S. Postal Service. Keep in mind, most banks and outlets that offer money orders require you to pay a small fee for the service, usually between $1 and $5.
Since the funds for money orders are paid when they are purchased, they can't bounce like a check—so the funds are guaranteed. Both the sender and recipient must sign their name on the money order, which makes it harder for thieves to cash.
These days, you may prefer sending money securely through a mobile payment app like Venmo or PayPal. Still, money orders remain a secure way to send and receive money, especially if you don't have access to a bank account.
When Should I Use a Money Order?
With the popularity of digital payment apps, money orders may seem like an old-school method of payment whose time has passed. However, money orders can still benefit you in a variety of scenarios—they include:
- You need to pay for something with a check but don't have a checking account
- You'd rather not disclose banking information to the recipient or are leery about sending sensitive information through the mail
- You want to safely send guaranteed funds internationally
- Your landlord or a vendor requires payment via money orders
- You want to track payment and verify it lands in the right hands
- You want the option to cancel the payment, just as you would with a check
However, money orders are not foolproof and can be subject to scams. Many of these scams involve the sender giving you a fake money order. One way to verify a money order is to make sure it has standard security features such as stamps or watermarks that are revealed under light. If you suspect a money order might be counterfeit, verify the funds with Western Union, USPS or another provider before cashing.
Where Can I Get a Money Order?
Money orders are available in a surprisingly wide variety of places, including the following:
- Banks and credit unions: Most banks and credit unions offer money orders for purchase. Typically, they're not available for online purchase, so you must obtain one from a teller at a branch location.
- Convenience stores and retailers: You can purchase money orders at many supermarkets, gas stations and major retailers through a money transfer service like Western Union or MoneyGram.
- Online banks: Many online banks, including Ally, don't offer money orders, but some do. TD Bank, for instance, offers money orders up to $1,000 for their customers.
- Check-cashing stores and payday lenders: Like retailers and other merchants, these establishments often sell money orders through Western Union or MoneyGram.
- U.S. Postal Service: You can purchase money orders at any post office location for $3 or less, with the cost depending on the amount of the money order. The USPS also offers money orders at military facilities for $0.70.
A few things to consider: If you're sending money to another country, make sure the money order provider you're using will be accepted in that country. Also, most providers limit the size of money orders you can purchase. For example, the largest money order you can buy through the USPS is $1,000. If you're trying to pay a $2,500 bill, for instance, you'll need two $1,000 money orders and one for $500.
How Much Does a Money Order Cost?
Fees for money orders vary based on where you purchase them. Here's a breakdown of prices from popular outlets that offer money orders.
| Money Order Costs | |
|---|---|
| Issuer | Money Order Cost |
| Chase Bank | $5 |
| TD Bank | $5; free with some accounts |
| U.S. Bank | $5 |
| Wells Fargo | $5 |
| Western Union | $1 |
| U.S. Postal Service | $2.10 fee for up to $500 $3 fee for up to $1,000 $0.70 for military |
| Grocery and retail stores | Fee varies by location |
Plan to use cash or a debit card to cover the full value of your money order plus fees. Banks and retailers generally don't allow you to purchase a money order with your credit card.
How to Fill Out a Money Order
To fill out a money order, the only information you need is the name and address of both the purchaser and the recipient. Remember, it's important to be accurate because you can't alter a money order once it's completed. Follow these steps to fill out a money order:
- Enter the recipient's name and address. Make sure the name of the person or business you're paying is spelled correctly. The recipient will be required to show ID when they cash the money order, so a mismatched name won't work.
- Add your name and address. List your address in the purchaser's section of the slip. Double-check the accuracy of the address just in case the money order is returned to you.
- Sign the front side of the money order. Both the sender and recipient must sign the money order for it to be valid. The purchaser's signature goes on the front of the slip, while the recipient must sign the back side to cash a money order.
- Add a note. There's usually space on the money order to write a memo. Doing so is optional, but you may wish to include a note for your records noting a corresponding account or order number or the reason for the payment.
- Hold on to the money order receipt. Once you've filled out the money order, detach the receipt and keep it for your records. The receipt doubles as proof of purchase and a tracking record since you can use the tracking number to confirm when the recipient cashes the money order.
How Does a Money Order Compare to Alternatives?
While money orders generally offer a safe alternative to sending cash or checks, they do come with fees and require you to buy one at a physical location. Consider other alternatives that might serve your needs better. Review this comparison table to gain a better understanding of your options:
| Money Orders vs. Alternatives | |||||
|---|---|---|---|---|---|
| Money Orders | Personal Checks | Cashier's Checks | Wire Transfers | P2P Apps | |
| Cost | Typically $5 or less | None | Up to $20 | $0 to $50 | Standard transfers are free, but instant transfer fees typically fall in the 1.5% to 1.75% range per transaction. |
| Availability | Available at banks, convenience stores, retailers and USPS | Available through banks, credit unions and other financial institutions | Available through banks, credit unions and other financial institutions | Available through banks and money transfer services like Western Union and MoneyGram | Available through apps or online platforms like PayPal, Venmo and Zelle |
| Limits | Up to $1,000 | Your checking account balance | No limit | Up to $1,000 daily | Limits vary by service and can cap out as high as $60,000 per week |
| Risk | Prepaid and can't bounce; lost or stolen money orders can be replaced | Risk of insufficient funds | Guaranteed by the bank | Payment guaranteed | Payment guaranteed as long as account has sufficient funds |
| Clearing Time | Can receive cash immediately; allow a couple days to clear if depositing into a bank account | Two to five business days | Typically clears within one to three business days, depending on the amount | Domestic wire: 24 hours. International wire: Up to five business days | May clear instantly for linked accounts; transfers could take several days to clear |
Frequently Asked Questions
No, generally you can't buy a money order with a credit card. You also can't buy a money order with a personal check. You must use cash, a debit card or a traveler's check to purchase a money order.
If you want to use your credit card, you can take a cash advance to pay for the money order. However, credit card cash advances typically come with an upfront fee and higher interest rates, so they're not a recommended option.
It's possible to cancel a money order, but you must do so quickly before it's cashed. Money order providers understand money orders can get lost or stolen and consequently have cancellation and refund policies in place for such financial emergencies.
Be aware you'll pay a cancellation fee, which can vary by provider. For example, Western Union charges a nonrefundable $15 processing fee if you have your receipt, while the refund processing fee for the USPS is $18.
Financial institutions generally handle money orders in the same way as checks. That means you can deposit your money order into your account at any branch location, ATM or your bank's mobile check deposit feature. All you need to do is sign the back of the slip to endorse it.
If you don't need all of the cash immediately, depositing the money order into your bank account may be the safest option. You can always withdraw the cash when you need it.
The Bottom Line
If you need to purchase or cash a money order, check out your local options, including your financial institution, supermarket, local retailer or even the post office. Money orders aren't necessarily the fastest or most secure payment choice in the digital age, but they're still an affordable option that doesn't require a bank account, especially if you don't have a checking account.
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