Many centuries ago, there were limited ways of sending and receiving money. However, today, we have lots of options. If you aren’t a fan of wire transfer, you could try e-transfer. If you don’t like e-transfer, you could try the typical bank transfer. If you find that stressful, you could purchase money orders. However, before you do that, you need to understand how it works.
Money order works in a simple way: first, you purchase the money order, then fill in the recipient’s name on the form, including the intended amount. After filing the necessary information, you can mail it like a check.
Money order remains one of the easiest and safest ways to send money. Unlike a check, it cannot be bounced. If you are interested in knowing more about money orders, including how it works and how to purchase one, read on.
How Do Money Orders Work?
Let’s begin with a terse definition of money order.
There are many forms of payment, including wire transfer, e-payment, checks, and we have money orders. Among these payment options, money orders can be singled out as the less popular.
Here is a summary of what money transfer is:
A money order is a certificate issued by a government or banking institution. With it, you (the payee) can receive cash on demand. A money order works like a check in that the individual who bought the money order may halt payment.
Money orders are readily accepted and changed to cash and are often used by individuals without access to a typical checking account. These instruments are a valid form of payment for little debts (both personal and business) and can be bought for a small service fee from most institutions.
Money orders were first issued by American Express in 1882 and later became known as traveler’s checks.
Money Orders: How Do They Work?
A money order is one of the safest payment methods out there. However, before you decide to use it, you may want to have a little insight into how it works.
Here is a summary:
So a person who purchases a money order will have to fill in the recipient’s name on a form, including the amount that the recipient should get. Most money orders have a max limit of $1,000. Thus, a buyer would need to buy many money orders if he requires more than the stated limit. Ensure you take your time to fill out the money order, and do so carefully as mistakes cannot be corrected.
The financial institution or authorized body that issues the money order to the payer will have the payee’s name and the issuer’s name, including the amount of money that can be cashed. This dollar value doesn’t come with the fees charged to the payee. Include all costs when buying money orders. And understand that financial institutions will normally charge more than a convenience store to issue money orders.
When a buyer buys a money order, it comes with a receipt that has the serial number of the money order. This detail should always be kept until the buyer is certain the money order has cleared. Without a receipt, tracing a money order can be hard.
How Can One Buy a Money Order?
Have everything you need: Get your cash or debit card ready, coupled with the name of the payee and the amount you want to send. Paying with a credit card might be possible but will come at an extra cost.
Fill it out: Aside from the payee’s name, you’ll need to add your name (and probably your address) and sign the money order. Ensure you enter the necessary details correctly because if you don’t, you won’t be able to make changes later.
Hold the receipt: The receipt will be a clone of the money order or a paper slip stating the details entered on the money order.
Track your money order: Your receipt will also come with a tracking number that can be used to confirm the money order got to the right recipient. If any issue arises, contact the institution where you purchased the money order for help.
When Should I Use a Money Order?
There are periods when using cash, or personal checks can put you at risk or aren’t accepted for payment. Here are four examples of when money orders are the ideal payment method:
You need to send money securely: Unlike checks, money orders don’t add your bank account number; they help ensure that only the recipient can use it, unlike mailing cash.
You don’t own a checking account: Since money orders require you to pay beforehand, you don’t need a bank account, and you can still settle your bills safely.
You are worried about bouncing a check: Because money orders are prepaid, they can’t be turned down for inadequate funds. Another option: A certified check or a cashier’s check, both of which guarantee payment and don’t necessarily have a $1,000 limit, unlike many money orders.
You are sending money internationally: Not all money orders work oversea, but U.S. Postal Service money orders can be transferred to about 25 countries. Another option: A wire transfer if you want the money to be sent faster and are ok with paying more.
Can Banks Block Gambling Transactions?
Where Can I Buy a Money Order?
Money orders aren’t free. They are usually bought. If you want one, you’ll need to go out there and buy one.
Fortunately, money orders aren’t hard to find. You can buy them at places where you are probably already running errands. Money orders can be gotten from the post office, big-box retailers like Walmart, grocery stores like Kroger, Publix, Safeway, etc.
You can also purchase money orders from a financial institution like your bank or an agency like MoneyGram, Western Union, etc.
