Definition of Money Order
A money order is a safer alternative to cash that you can pay with using cash, debit card, or other guaranteed funds. It is a certificate that can be deposited into your bank account or exchanged for cash.
How Money Orders Work
A money order is considered an alternative to cash or checks. Like a check, a money order is designed to be sent to a specific person and cannot be cashed or deposited by anyone else. Unlike a check, a money order is paid for in advance, so it is guaranteed. You can use a money order to buy goods, pay bills, or send money to someone—whether locally or internationally.
Where Can You Buy a Money Order?
You don’t have to go to a bank or credit union to buy a money order. There are many places where you can purchase them, including:
- All post offices in the United States
- Banks and credit unions
- Check-cashing and money transfer stores
- Some grocery stores and convenience stores like Walmart
How to Purchase a Money Order
You can purchase a money order with cash, a debit card, or by transferring funds from your checking or savings account. While you generally cannot buy a money order online, there are many other ways to send cash directly to someone else from your mobile phone or computer.
When you buy a money order, you will need to fill out the sender’s and recipient’s information. Money orders typically require the sender’s name and depending on the financial institution issuing the money order, the sender’s address. You will also need to write the name of the payee or recipient and their address. Finally, as the sender of the money order, you will need to sign the money order.
Can You Purchase a Money Order Using a Credit Card?
Generally, you cannot purchase a money order using a credit card. However, if you find a retailer willing to accept a credit card, the payment is usually treated as a cash advance. Cash advances can be very costly. There is typically a fee of about 5% of the amount you withdraw, and the interest rate is likely to be higher than your usual credit card interest rate.
How Much Does a Money Order Cost?
When purchasing a money order, you will need to pay a small fee in addition to the cash amount for the money order. For example, if you purchase a $250 money order from the U.S. Postal Service, you will need to pay a fee of $1.45. This means that the total cost of the money order is $251.45.
The convenience and cost may determine where you buy from. Rates are usually lower at post offices, supermarkets, and convenience stores—around $1 per money order. Banks and credit unions may charge fees of up to $5 or more.
Best Times to Use a Money Order
Although credit cards, checks, and apps like PayPal and Zelle are widely used as payment methods, there are some times when it may be better to use a money order instead.
You may prefer to use a money order if:
- You do not have a bank account but want a safer alternative to cash.
- You do not want to tie your payment to your bank account or credit card.
- You want to send money internationally.
- You are required to use a money order to make a purchase.
Where Can You Cash a Money Order?
If you receive a money order
Source: https://www.thebalancemoney.com/money-order-basics-315432
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