A money order is a good option for sending money if you don’t have a bank account or don’t want to share your banking information with the recipient. They can be obtained from various locations, such as U.S. post offices, Walmart, Western Union, banks, and other outlets. There is often a limit of $1,000, even when purchased from banks. Typically, payment for money orders is required in cash or through a debit card.
Here’s what you need to know about money orders, how they work, when to use them, and how to fill out a money order.
Table of contents
- What Is A Money Order?
- When Can I Use A Money Order?
- Where To Get A Money Order
- How To Fill Out A Money Order | Step by Step
- Mistakes To Avoid When Filling Out A Money Order
- How To Deliver A Money Order
- Can I Purchase A Money Order?
- What Are The Benefits Of Using A Money Order?
- Are There Alternatives To Money Orders?
- FAQs On How To Fill Out A Money Order
- Conclusion
- References
- We Also Recommend
What Is A Money Order?
According to Investopedia, a money order is a safe alternative to cash or a personal check, usually issued by a government or banking institution, that works similarly to a check. A money order can be cashed or deposited into a bank account.
Money orders are widely embraced and easily exchanged for cash, making them a popular choice for individuals who lack access to a traditional checking account. They serve as a legitimate means of settling various types of debts, whether personal or business-related and can be obtained from most institutions for a nominal service fee.
When buying a money order, it is essential to specify the payee’s name (the recipient), and the issuing financial institution’s name must be included on the order. This dual information ensures that only the designated payee can cash the money order, enhancing its security compared to cash.
Moving on, we’ll share how to fill out a money order.
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When Can I Use A Money Order?
When conventional payment methods such as cash, personal checks, or smartphone apps are not viable options for making or receiving payments, a money order can be a viable alternative. Money orders are widely accepted as they are prepaid, eliminating the risk of insufficient funds.
Similar in appearance to a check, a money order provides increased security compared to cash. It designates a specific recipient, requiring their endorsement and identification for cashing. This makes money orders a secure option for individuals without a checking account or those who prefer not to accept personal checks.
While certified and cashier’s checks issued by financial institutions offer even greater security, especially for larger amounts, they come with substantially higher fees compared to money orders.
Where To Get A Money Order
You can get a money order from a designated vendor, where you can obtain a physical money order. Various U.S. locations, such as Walmart, CVS, and the 31,132 U.S. Postal Service (USPS) retail offices, offer money orders, often with extended hours on evenings and weekends.
The USPS and certain banks and credit unions issue money orders with their branding and format, while other sellers provide MoneyGram or Western Union options. Regardless of the type chosen, the seller will imprint the date and amount before providing an incomplete money order for you to finalize manually.
It’s important to note that most money order transactions involve a fee, so it is advisable to explore different options. Walmart typically charges $1.00 at most locations, and the USPS charges between $2.00 and $2.90, depending on the amount. Money orders have a value limit of $1,000, but you can order multiple orders simultaneously.
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How To Fill Out A Money Order | Step by Step
1. Fill in the name of the payee
In the “pay to” or “pay to the order of” field of the money order, inscribe the name of the payee, whether it’s an individual’s name or the name of a business. It’s crucial to write the name legibly in ink.
Completing this section immediately after purchasing the money order is vital because the person or entity named in this field is the sole authorized individual allowed to cash or deposit it. If the money order is lost or misplaced without the payee’s name specified, there is a risk of fraud, as someone else could write their name on it.
If given the option, fill out your name in the field labeled “from,” “purchaser” or “sender.”
2. Include your address in the purchaser section
Fill in the purchaser’s address in the designated space on the money order form. If there is a second field for the payee’s address, be sure to provide that information as well.
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3. Write the account or order number in the memo field
The memo line on a money order provides a space for indicating the purpose of the transaction. This could involve specifying it as a purchase for a particular item or a payment toward a debt. If the payee provides an account or order number, you can include that information in the memo field. In some cases, the money order may use terms like “payment for” or “account number” instead of “memo.”
4. Sign your name in the purchaser’s signature section
Sign the front of the money order where indicated. This section may be labeled Purchaser’s signature, Purchaser, From, Signer, or Drawer. Don’t sign the back of the money order, which is where the payee endorses it.
5. Keep your receipt
It’s important to retain the receipt as it contains a tracking number that enables you to verify whether the intended recipient cashed the money order. In the event of loss or theft, the tracking number is essential for facilitating the replacement of the money order, although a processing fee may be incurred for this service.
The receipt can also help you cancel the money order should your plans change.
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Mistakes To Avoid When Filling Out A Money Order
Filling out a money order should be straightforward if you know what information is needed and where it should go. Here are common mistakes to avoid while filling a money order:
- Misspelling the payee or recipient’s name
- Writing the wrong payee or recipient address
- Leaving the recipient field blank
- Writing your name or address incorrectly
- Not including an account number in the memo line (if you’re using the money order to pay a bill)
- Forgetting to sign the money order or signing it in the wrong place
- Losing track of your receipt
Another mistake to avoid is neglecting to compare the fees associated with purchasing money orders before making a transaction. While money orders generally come with a relatively low cost, some issuers impose higher fees than others.
It’s also advisable to familiarize yourself with the policies of the money order issuer regarding the cancellation or replacement of a lost or stolen money order. While losing or having a money order stolen is not an ideal situation, being aware of the procedures beforehand can assist you in efficiently resolving the situation and recovering the funds if such an incident occurs.
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How To Deliver A Money Order
After completing all the required fields, make sure to tear off the receipt. This stub contains the official identification number of the money order, enabling you to monitor whether it has been cashed and serving as a record of your payment.
With the filled-out money order and the detached receipt, you can securely deliver it to your recipient by hand or through the mail. Only the designated recipient will have the ability to cash the money order.
Can I Purchase A Money Order?
You can acquire money orders using cash or a debit card at various locations, including banks, credit unions, check-cashing establishments, the U.S. Postal Service, many grocery stores, and certain large retail stores.
Refusing a credit card for money order purchases is advisable, as some credit card companies may categorize it as a cash advance, resulting in substantial fees. Additionally, some issuers may not accept credit cards as a form of payment.
There could be limitations on the size of the money order you can purchase. For instance, the U.S. Postal Service permits the purchase of money orders up to $1,000 for domestic transactions. In addition to the money order cost, a fee ranging from $1 to $10 is typically applied.
What Are The Benefits Of Using A Money Order?
Money orders serve as a practical substitute for checks or cash when settling bills, repaying debts, or making substantial purchases, especially for individuals without a checking account.
They provide a secure paper-based option, eliminating the risk of payments bouncing due to insufficient funds as they are prepaid. The advantage of money orders extends to not necessitating the purchaser to possess a bank account, as they can be acquired using cash.
Moreover, money orders offer a viable alternative to electronic payments, particularly when mailing money is preferred or required. Since they lack bank account information, there is minimal risk of it falling into the wrong hands. Similar to checks, only the designated recipient can cash the money order.
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Are There Alternatives To Money Orders?
Money orders present an economical and secure method of guaranteed payment; however, they may not be suitable for every circumstance.
Due to the common limitation of money order transfers to $1,000 or less, they may not be the optimal choice for larger transactions, such as buying a used car. In such cases, individuals with a bank account might find cashier’s checks, certified checks, or wire transfers more suitable. For those without a bank account, cash payment could be the most viable option.
Additionally, since money orders cannot be utilized for online transactions, they do not serve as a viable replacement for a bank account, especially if online bill-pay services are desired. In such situations, a prepaid debit card may emerge as one of the more practical alternatives for facilitating online bill payments without a bank account.
FAQs On How To Fill Out A Money Order
A: In the “pay to” or “pay to the order of” field, write the name of the payee, which can be an individual’s name or the name of a business. Make sure to use clear and legible handwriting in ink.
The memo line allows you to specify the purpose of the money order, such as a purchase description or a payment toward a debt. It’s also where you can include account or order numbers provided by the payee.
The receipt contains a tracking number, enabling you to verify whether the money order was cashed. It also serves as a record of your payment. In the case of loss or theft, the receipt and tracking number are essential for replacing the money order.
No, money orders cannot be used for online transactions. If you need to make online payments and don’t have a bank account, consider using a prepaid debit card as an alternative.
Conclusion
A money order enables the recipient to promptly receive cash payment from a bank or another financial institution. This makes money orders a commonly used method for facilitating small to medium-sized payments in situations where using cash or personal checks may not be convenient.
References
- nerdwallet.com – How to Fill Out a Money Order Step-by-Step
- westernunion.com – How to make a money order: send money internationally
- bankrate.com – How to fill out a money order
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