Personal Finance

How to Fill Out a Money Order

You can't really participate in the economy without accepting a certain amount of risk. Checks can bounce, credit cards can be used fraudulently, and even paper money can be counterfeit. Whether you're receiving or making a financial transaction, something can always go awry.

While no transaction is completely secure, a money order is about as close as you can get. For sending cash securely, or for those who don't have a checking account and thus can't send a check if it is required, paying with a money order is often a good option. In some cases, a seller of goods and services will only accept a money order as payment. If you've never used one, chances are you'll need to someday.

Paying with a money order is simple, as long as it's filled out correctly. Here's how to make sure your money order gets to the right person, how to cash it if you're the recipient, and how to avoid getting scammed.

Steps to Filling Out a Money Order

To fill out a money order:

  1. Write the name and address of the person or business you're sending money to. Make sure to use the right name and spell it correctly because it will be checked against the recipient's ID. You can include extra information such as what the money is being used for, but this is optional.
  2. Sign the money order and receive a receipt. Make sure to keep this receipt, because it allows you to cancel the money order if necessary or retrieve it if it goes missing. If the recipient never gets the money order, the receipt will act as proof that you sent it.

How to Cash a Money Order

A money order can be cashed at most banks and credit unions, though you might have to pay a fee if you're not a member. You can also cash a money order at the company that issued it, such as Western Union or a grocery store.

Because a money order is valid only for the specified recipient, you'll need to present a current form of ID to cash it. That means a driver's license, passport, state ID or military ID matching the name on the money order. If the name doesn't match, you'll need the person who paid for the money order to replace it.

How to Protect Yourself From Money Order Scams

Because a money order is a prepaid, secure form of payment, scammers will tend to ask for a money order instead of a regular check. By the time you realize what's happened, the money is long gone. You can cancel a money order in some instances, but don't bank on that.

Before sending out a money order, verify that you're giving the money to a reputable vendor of goods and services. If a business only accepts money orders, that's a good cue to vet them a little more thoroughly before buying.

When you're the one receiving a money order, call the issuer to ensure the money order is valid before attempting to cash or deposit it. If you deposit a money order you aren't sure is real, don't spend the money right away. It can take a bank several days or longer to determine whether a money order is fake, and if you've already spent the money, you could be charged overdraft fees if the amount hasn't yet been deposited into your account.

If you're paying a large sum of money over a period of time, look into escrow services, which will hold cash until the job is done. Escrow accounts protect both parties because they verify the money, but don't release it until certain conditions have been met.

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