# How to Obtain and Use Money Orders: A Secure Payment Method

![Woman posting a money order in an air mail envelope at a post box in London. ](https://www.investopedia.com/thmb/mLFYN1LaISHaaNqK4rlsJ-tpAHs=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1271563862-2e48ccb1f9a94a3dacdd33c5bc4a5b22.jpg)

*— martin-dm / Getty Images*

> **Definition**
>
> A money order is a prepaid form of payment that provides a secure way to send money or make payments.

## What Is a Money Order?

A money order serves as a secure, widely accepted alternative to cash or personal checks, suitable for sending money or paying bills. Issued by governments or banks, money orders eliminate the risk of carrying cash and cater to individuals lacking access to standard checking accounts. Money orders have evolved into reliable financial tools that you can purchase for a minor service fee at diverse locations, including banks, post offices, and some retail stores.

Money orders were first issued by the U.S. Postal Service in 1864 as a safer way to send money through the mail. American Express introduced a competing money order product in 1882.

### Key Takeaways

*   Money orders are a safe alternative to cash or checks for small to medium payments and are issued by banks, post offices, and retailers.
*   They are a convenient payment method for those without a checking account and can be cashed or deposited like a check.
*   Money orders can be replaced if lost, but they may incur a fee, and tracing them could be challenging compared to checks.
*   While they offer advantages like not including personal bank details, money orders can also be fraudulent; hence caution is advised when receiving them.
*   Cashier’s checks offer a more secure alternative for large transactions compared to money orders, which are more suited for smaller amounts.

## Understanding the Functionality of Money Orders

If you buy a money order, you will have to fill out the name of the recipient on a form and the amount that the recipient should receive. Domestic money orders typically have a maximum limit of $1,000, so you'd need to purchase multiple orders if you need more than that amount. Be sure to [fill out the money order carefully](https://www.investopedia.com/how-to-fill-out-a-money-order-step-by-step-4589636); it's a one-off purchase, and you need to keep a record of it.

Your money order will show the name of the person or entity being paid, the issuer’s name, and the amount of money that can be cashed. This dollar value doesn't include the fees charged. Be aware that different locations may charge different [fees for money orders](https://www.investopedia.com/money-orders-can-be-a-simple-safe-and-cheap-way-to-transfer-money-here-s-how-to-avoid-the-pitfalls-4589635).

When you pay for a money order, it comes with a receipt that includes the serial number of the money order. You should keep this information until you're certain the money order has cleared. Without a receipt, tracing a money order can be difficult or even impossible.

> **Warning**
>
> A money order is harder to trace than a check, so keep your receipt until you are sure the order has been received and cashed.

## Pros and Cons of Using Money Orders

Advantages

*   Doesn't include sensitive information
    
*   Recipient can cash the order at a local bank or credit union
    
*   Can be deposited into a bank account
    
*   Can be issued in one country and cashed in another
    

Disadvantages

*   Can be harder to track than a personal check
    
*   Buying and cashing the money order can incur a fee
    
*   Funds could be delayed, depending on where it's cashed
    
*   Can be fraudulent
    

### Advantages Explained

*   **Doesn't include sensitive information**: In some situations, paying with a money order can be safer than paying with a personal check. That's because personal checks include the account holder's routing number and bank account number printed on the bottom—this information can be stolen and used to create and sign fraudulent checks. In contrast, money orders don't include personal information about the purchaser.
*   **Recipient can cash it at their local bank or credit union**: When you receive a money order, you don't necessarily have to go to the same place that sold the money order or the sender's bank. You can usually cash it at your local bank or credit union and may be able to cash it at certain retailers, like grocery stores and drug stores.
*   **Can be deposited into a bank account for free**: You can deposit a money order into a bank account, much as you would do a check. Depositing money orders is a good option for recipients concerned about the fees charged to cash the certificates at other locations.
*   **Can be issued in one country and cashed in another**: Money orders can and often are used to send money outside the country. An issuer with multiple [branches](https://www.investopedia.com/terms/b/branch-banking.asp) in different countries can issue a money order in one country that can be cashed in another country. International money orders thus provide an [inexpensive and swift way to send money across the border](https://www.investopedia.com/financial-edge/0411/7-low-cost-ways-to-transfer-money.aspx).

### Disadvantages Explained

*   **Can be harder to track than a personal check**: To track a money order, you must fill out tracking forms and pay an additional fee to learn whether the money order has been cashed. The entire process for researching the status of a money order can take weeks. However, the U.S. Postal Service (USPS) offers an online money order inquiry service that allows you to input a money order number and get an update on its status.
*   **Buying and cashing the money order can incur a fee**: When you buy a money order you may need to pay a small fee, and the same goes for cashing a money order somewhere other than your own bank or credit union. Some potential options for bypassing fees for cashing money orders are the post office, your own bank account, or the issuer's office.
*   **Funds could be delayed, depending on where it's cashed**: Note that if you cash a money order at your local financial institution and it's not a branch of the issuer, you might not be able to get all of the money right away. It depends on your bank's funds availability policy.
*   **Can be fraudulent**: Some unscrupulous people create fake money orders. Be wary about receiving one from someone you don't know, and don't spend the cash from money orders you deposit in the bank until the deposit transaction clears.  
    

## Steps to Purchasing a Money Order

You can buy a money order at any bank or credit union, as well as some drug stores, most grocery stores, convenience stores, and any store that offers check cashing or money services such as [MoneyGram or Western Union](https://www.investopedia.com/articles/personal-finance/081715/sending-money-moneygram-vs-western-union.asp). The U.S. Postal Service also offers money orders.

To order one, you simply need to bring enough money to pay for the money order (including fees), either in cash or with a [debit card](https://www.investopedia.com/terms/d/debitcard.asp).

> **Fast Fact**
>
> For transactions over $3,000, you may need to show ID and fill out a form to prevent money laundering.

## Costs Associated With Money Orders

Although buying a money order involves a fee, it's usually a small fraction of the order's value. For example, the U.S. Postal Service charges $2.35 for money orders of up to $500 and $3.40 for orders from $500.01 up to $1,000. Fees are lower for money orders issued in military postal facilities.

Money orders from commercial institutions may have different prices, but the fees will tend to be similar. However, international money orders may incur higher fees.

## Comparing Money Orders and Cashier's Checks

[Cashier's checks](https://www.investopedia.com/terms/c/cashierscheck.asp) and money orders are both used when cash or personal checks are impractical. Neither can be bought with credit—you have to use cash or a debit card.

[Unlike a money order](https://www.investopedia.com/personal-finance/what-difference-between-cashiers-check-and-money-order/), a cashier's check is drawn by a [financial institution](https://www.investopedia.com/terms/f/financialinstitution.asp) against its assets. This is considered more reliable than a personal check because there is no chance of the check bouncing.

For this reason, cashier's checks are frequently used to make large purchases, such as for a house or vehicle. Banks might hold personal checks, but funds from cashier's checks are generally available the next business day.

In contrast, money orders are typically used for smaller transfers, such as for [rent](https://www.investopedia.com/articles/personal-finance/091214/do-you-need-rent-receipt.asp) or mortgage payments. Many institutions, such as the U.S. Postal Service, cap money orders at $1,000.

## Exploring Alternatives to Money Orders

In addition to checks and money orders, other ways to send guaranteed funds to an individual or business include traveler’s checks, [wire transfers](https://www.investopedia.com/terms/w/wiretransfer.asp), [bank drafts](https://www.investopedia.com/ask/answers/072915/how-can-i-cancel-bank-draft-i-have-purchased.asp), and cashier's checks. But money orders are frequently used for payment in situations where the party being paid isn't set up to receive cash.

Personal checks, debit or credit cards, and online payment apps may also be acceptable. However, money orders are slightly different from these alternatives. Unlike electronic payments, recipients don't need special technology to accept a money order. And, unlike personal checks, a money order can't [bounce](https://www.investopedia.com/terms/b/bouncedcheck.asp).

## How Do You Fill Out a Money Order?

When you buy a money order, you will need to include information about the purchaser (you) and the recipient. Write the name of the intended recipient in the "Pay to the Order" field, and your full legal name and address in the appropriate fields. Fill in the amount to be transferred. Some money orders may not ask for your address. Finally, sign and date the money order, and keep the receipt.

## Where Can I Cash a Money Order?

You can cash a money order in the same places that issue money orders, such as a bank, credit union, post office, check-cashing store, or even some convenience and grocery stores. You will need to endorse, or sign, the order and verify your identity. There may be a small fee for cashing the money order, which you can skip by depositing the money order into a bank account.

## How Long Is a Money Order Good for?

Money orders don't expire, but depending on the state and issuer, they may incur additional service charges if you cash them more than a year after they were issued. These terms will be described on the back of your money order. However, domestic money orders from the U.S. Postal Service will never expire or lose value.

## The Bottom Line

Money orders provide a secure and reliable way to send and receive payments, especially in situations where cash or personal checks are not viable. Available at banks, post offices, and many retailers, money orders are widely accepted and offer a layer of protection against loss with the possibility of replacement if you have a receipt. They can be used for transactions up to $1,000 domestically and are a viable option for sending funds internationally. However, it's crucial to remember that money orders come with fees and can be less traceable than checks, so keeping the receipt is essential to ensure their security.

> **Article Sources**
>
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>     
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>     
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>     
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>     
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>     
> 10.  Western Union. "[Cashier’s Checks: Everything You Need to Know](https://www.westernunion.com/blog/en/ca/cashiers-checks-everything-you-need-to-know/)."
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> 11.  Citizens Bank. "[What Is a Money Order, and How Do They Compare to Other Cash Payments](https://www.citizensbank.com/learning/what-is-a-money-order.aspx)?"
>      
> 12.  The Huntington National Bank. "[Cashing a Money Order](https://www.huntington.com/learn/checking-basics/cash-money-order)."
>      
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>      
> 14.  Western Union. "[Do Money Orders Have an Expiration Date](https://wucare.westernunion.com/s/article/Do-money-orders-have-an-expiration-date?language=en_US)?"