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Personal Finance

How Do Money Orders Work?

These days there are countless ways to transfer money, both online and in person. You can pay your friends directly with Venmo, send them money from your bank or even use an app like Facebook. Transferring money has never been easier, whether you're sending your niece some birthday money or paying a vendor for an online order.

But if you're sending cash, there are still a few tried-and-tested ways to send money. Sending cash directly through the mail is a big no-no, and writing a check isn't an option if don't have a checking account.

So what's left? Money orders. Money orders are a way to securely transfer money because they are guaranteed by cash and can only be deposited by a person with proper identification. If you lose a money order, you can get it replaced easily.

So how does a money order work? Read below to find out.

What Is a Money Order?

A money order is an alternative to checks or cash when a secure payment is needed. You have to pay for a money order upfront, which means it's a guaranteed payment—unlike a check, which might bounce.

Individual money orders typically have a limit of $1,000. If you need to send more, you have to purchase several money orders. Each one usually costs a few dollars in transaction fees.

When you fill out a money order, you specify exactly who the receiver is. Then they have to go to a bank or money order issuer to cash the money order. The receiver has to bring an ID to deposit or cash their money order.

When Should I Use a Money Order?

If you need to pay for something with a check but don't have a checking account or checkbook, you can use a money order. Landlords and other providers who only accept checks or cash will also accept a valid money order.

Some people also prefer money orders because they don't show your bank account information, unlike a personal check. This provides another level of security.

Using money orders is also a good way to send money internationally because they are guaranteed and most companies have branches in major cities. Every money order provider has its own list of accepted countries, so make sure your city is on the list before you fill out a money order.

Where Do I Get a Money Order?

You can find money order issuers in many places. They're available in locations such as most grocery and convenience stores, gas stations, credit unions, banks, check-cashing, and payday loan stores, and even the post office.

Customers pay for a money order with cash or their debit card. You can try to pay for one with your credit card, but your credit card company might categorize the purchase as a cash advance, which comes with extra fees and interest. Be sure to check with your credit card issuer before using it to purchase a money order.

How Much Do Money Orders Cost?

Prices vary for money orders based on the merchant. The post office charges $1.20 for orders up to $500 and $1.65 for $500.01 to $1,000. Military money orders cost just 40 cents. Walmart charges 70 cents for a $1,000 money order. Costs increase if you're sending money internationally.

Cashing a money order is a little more expensive. Walmart charges $3 to cash money orders up to $1,000 and $6 for ones between $1,000 and $5,000. Banks and credit unions have their own individual rate schedules for money orders, so call and ask if you're unsure.

Your bank or credit union will probably deposit the money order for no fee, though they might hold the funds for a few days to ensure the money order's authenticity.

While money orders may seem outdated in today's technology-driven world where digital payment methods continue to grow in popularity, they can serve a purpose. As a safe alternative to sending cash, and for those without checking accounts, money orders can provide a needed solution.

If you don't have a checking account, consider opening one to help you access cash more easily. In addition, consider getting a free copy of your credit report to check your credit score and begin working to boost your credit. Taking these important steps will help you improve your financial future.


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This service is completely free and can boost your credit scores fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report.

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