A money order is a paper payment that can be used as an alternative to cash or check. Unlike a check, a money order cannot bounce, doesn’t require a bank account, and is a very secure way of making payment to a third party. Money orders can be purchased from banks, grocery stores, and some retail stores. To understand a money order better, you may need some examples.
A money order helps you send and receive money large amounts of money safely without the much-hated bank fee. Unfortunately, unlike a check, money orders don’t come in varieties or examples.
A money order is a great payment option and can be leveraged by the unbanked. If you are new to a money order, this post will bring you up to speed. Keep reading to understand what a money order is, how it works, and examples.
Money Order Example
Let’s begin with a brief definition of a money order.
A money order is a paper payment tool that allows you to transfer money to an individual securely and affordably. The issuer is paid the face value of the money order in cash, or via debit card or traveler’s check, so the payee can be sure that the money order is good for the amount specified.
Money orders are safer than paper checks and can be purchased from different locations. Banks, grocery stores, convenience stores, gas stations, the United States Postal Service, and check-cashing outlets issue them.
Many issuers of money orders have a $1,000 max purchase limit. Money orders normally are used for smaller, day-to-day transactions, like paying a utility bill or a deposit on a rental apartment. If you need to make a payment of over $1,000, you could purchase enough money order to cover the expenses.
Money orders are more affordable than cashier’s checks. The U.S. Postal Service charges just $1.45 for a money order up to $500 and $1.95 for money orders from $500.01 to $1,000. Walmart charges a max $1 fee. A cashier’s check costs around $5.
How Does a Money Order Work?
When you buy a money order, you’ll need to provide the money beforehand, just as you would a cashier’s check. You’ll need to pay for it using cash, a debit card, or traveler’s checks; normally, personal checks and credit cards cannot be used. Unlike cashier’s checks, money orders will have a max limit, usually around $1,000.
You’ll also have to pay a transaction fee for a money order, which is usually cheaper than cashier’s checks. Depending on where you buy a money order from and how much it’s for, the fee will vary, but you can expect to pay $1 to $5.
With technological advancement, consumers can now embrace many alternatives to money orders. The newer alternatives are cheaper, more efficient, and safer.
Common alternatives to a money order are MasterCard/Visa credit payment systems, the Kobini system in Japan, and the Postepay system in Italy. In the U.S., PaidByCash is becoming more popular and is currently offered in over 60,000 stores across the country.
A money order helps you send and receive money large amounts of money safely without the much-hated bank fee. Unlike a check, money orders don’t come in varieties or examples. Here is a picture of a money order to have a little insight into how it looks ( Insert picture of a money order)
What Do You Need to Fill Out a Money Order?
The requirements to fill out a money order differ by institution, whether it’s Western Union or the U.S. Postal Service. Each institution’s money order may vary slightly in appearance also. Generally, if you are sending a money order, the required info you’ll need is:
- Payment amount
- Your name and address
- Payee’s address
- What the payment is for and/or the billing account number
- Payee’s name (i.e., the person being paid)
You’ll also need a form of payment to buy the money order. Some issuers offer fewer payment options, while others offer more. You likely won’t be able to buy a money order with a credit card.
How to Purchase a Money Order?
Money orders can be bought with cash or debit card at banks and credit unions, check-cashing businesses, the U.S. Postal Service, multiple grocery stores, etc.
Don’t use a credit card to buy a money order since your card company may consider the purchase a cash advance and charge an extra fee. Some issuers won’t take credit cards as payment, either.
There may be limits on the size of money order you can buy. The Postal Service, for instance, lets you purchase money orders up to $1,000 if you are sending it within the United States. In addition to the money order price, a $1-$10 fee normally applies.
Money orders can be a useful option for checks or cash for paying bills, settling debt, or making big purchases.
They’re a safe paper option for individuals who don’t want to experience bounced payments. Money orders cannot bounce since they are prepaid. In addition, they don’t require the purchaser to own a bank account, since they can be bought without one, like cash.
In addition, money orders are an ideal alternative to electronic payments when you want or are required to send money via the mail. They don’t have bank account information, so it won’t get into the wrong hands. Plus, as with a check, only the recipient can cash the money orders.
Use a money order if:
- You need to make a payment but don’t have a bank account
- You are making a payment of less than $1,000
- You need a payment instrument that is guaranteed not to bounce
- You want an affordable way to settle your bills or conduct day-to-day transactions
- The payee wants the money fast
- You want a payment tool that is very accessible and easy to buy