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Money Orders: What You Need to Know

Money orders are a relatively cheap type of prepaid payment in which money is guaranteed by a third party, such as the post office or Western Union.
Banking, Banking Basics

In this article

  5 times when you should use a money order
  Where you can get an inexpensive money order

money orders

A money order is a form of prepaid payment that’s a safe alternative to cash or checks. You specify who will receive the money order, and both you and that person must sign it for it to be valid. Unlike with a personal check, the money is guaranteed by a third party, such as the post office, Wal-Mart or Western Union. The cost usually ranges from under a dollar to several bucks, which can be a bargain compared with some other ways to send money, especially internationally.

>>MORE: Lost money order? How to claim your cash

When should I use a money order?

There are times when using cash or personal checks can put you at risk, or they aren’t accepted for payment. Here are five examples where money orders are the best payment method:

  • You don’t have a checking account and need to pay bills. Since money orders require you to pay in advance, the money isn’t tied to any bank account and can be easily sent to other people. If you want to store your money and pay for more than just bills, a better solution is a prepaid debit card.
  • You’re worried about bouncing a check. Because money orders are prepaid, they can’t be rejected for insufficient funds and aren’t subject to the fees that come with bouncing a check.
  • You’re mailing money. A money order helps ensure that only the recipient can use it.
  • You need to send a payment more securely. Unlike checks, money orders don’t include your bank account number.
  • You’re sending money internationally. Not all money orders work abroad, but U.S. Postal Service money orders can be sent to 28 countries. It’s an alternative to a wire transfer, which is faster but usually more expensive.

» MORE: Best ways to wire money internationally

Where do I get a money order?

Here are some of the top places to get a money order, beginning with the least expensive.

  • Wal-Mart: The big-box store offers inexpensive money orders: 70 cents for up to $1,000.
  • Banks and credit unions: Financial institutions sell money orders for around $5 each, with values typically up to $1,000. They often waive fees for customers with premium accounts.
  • Money transfer agents: You can buy money orders from companies such as Western Union and MoneyGram at convenience stores, drugstores, supermarkets, check-cashing outlets and elsewhere. Western Union money orders, as an example, generally cost from 99 cents to $1.50; charges vary by location. The maximum value is usually $1,000.
  • U.S. Postal Service: Money orders at your local post office are $1.20 for orders up to $500; $1.60 for amounts over $500 up to $1,000. There’s one exception: Military money orders, issued by postal military facilities, are 40 cents. An international money order with a value of up to $700 costs $8.25.

You can typically pay for a money order with cash or a debit card, but there may be other options depending on the place. Just steer clear of using a credit card, because your issuer might consider it a cash advance and charge you extra.

Tips when sending money orders

  • Keep the receipt as proof of payment. The receipt will be a carbon copy of the money order or a paper slip recording the information entered on the money order.
  • Track your money order. Your receipt will also have a tracking number that you can use to verify that the money order got to the intended recipient. If any problems arise, contact the place where you bought the money order to get help.
  • If the money order is lost or stolen, or if you filled in the wrong information, you may be able to cancel it and get a replacement or refund. You’ll need to bring your receipt and the money order itself, if you have it, to the place where it was purchased. But it could cost a fee. For example, Western Union charges $15 to replace a money order.

Where can I cash a money order?

Your best bet is to cash a money order at the place that issued it, whether that’s a bank, post office or other location. Check-cashing locations, convenience stores and grocery stores can be alternatives, but watch out for fees. Wherever you go, you’ll probably need to show identification.

Your best bet is to cash a money order at the place that issued it, whether that’s a bank, post office or other location.

If you don’t need the money right away and you have a bank account, consider depositing it. Banks accept U.S. Postal Service money orders as they would regular checks at branches, ATMs or even on a banking app with a mobile check deposit function. Don’t forget to sign the back of the money order before depositing.

Knowing your way around money orders can help you send a payment more safely than cash or a check and avoid any unnecessary fees in the process.

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: mburnette@nerdwallet.com. Twitter: @margarette.

Updated Feb. 27, 2017.