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A Guide to Money Orders 2022

Updated on July 21, 2022 01:53 pm
blank check with fountain pen

Money orders may seem out of date in a world full of digital payment options. Online money transfers, mobile money transfer apps, and contactless debit and credit cards are all options for sending and receiving money nowadays.

Nevertheless, they continue to fill a crucial demand that other kinds of payment cannot easily fill. In some circumstances, they are advantageous and necessary.

In this article, we take a closer look at money orders. It covers everything you need to know about them, including what they are, where to buy them, how they work, how to send an international money order, how much they cost, how safe they are, and more.

What Is a Money Order?

Similar to a check, a money order is a piece of paper that is used to make payments and send money domestically and internationally. It can be delivered by hand or sent through the mail. They are convenient, affordable, and widely accepted. 

Are Money Orders Safe?

The recipient's name and the name of the financial institution issuing the money order must both appear on the document. It must be signed by both the payer and the payee to be valid. 

Money orders are safer than cash because it is difficult for someone other than the payee to cash them due to the information on them.

If they are lost or stolen, you can cancel and replace them. Just be sure to save your receipt so you can track it later and get your money back if it is lost or stolen.

Money orders cannot be returned for lack of funds because they are prepaid, unlike checks that can bounce. Therefore, the money will be guaranteed if the recipient attempts to cash one.

They are among the safest methods for sending money. a more secure option than cash or sometimes even personal checks.

How Does a Money Order Work?

When purchasing a money order, the amount written on it must be prepaid with the issuer's charge, and a form must be completed and returned to the issuer. Only the selected recipient may then be paid using the money order.

You can pay for it using cash or a debit card, or a traveler's check, although some providers will allow you to pay with a credit card. 

For individuals who prefer not to submit their personal information through the mail, money orders are another option.

Where Can I Get a Money Order?

Several places sell money orders. These include

  • Post offices such as the United States Postal Service 
  • Banks
  • Credit Union
  • Retail stores
  • Pharmacies
  • Grocery stores
  • Supermarkets
  • Check-cashing stores
  • Pay-day loan stores

You can buy international money orders from postal services, select banks, and remittance companies like Western Union and MoneyGram. They are accepted in a lot of places and can be converted into local money in many countries.

How Long Does International Money Order Take?

Depending on where the mail is being sent, it can take an international money order anything from a few days to a few weeks to arrive. Because there are several processes involved, it is not the fastest option for sending money overseas.

You can create your money order in no more than a few minutes. The issuer will take a few minutes to process your request and give you the money order after you complete the form and pay for it. 

However, after you have placed and paid for your money order, it will take longer to physically send it to your recipient before they can get the payment.

What Is the Money Order Limit With International Money Orders?

The maximum sending limits for money orders are relatively small. For instance, the United States Postal Service (USPS) has a transfer cap of $700 for international money orders and permits the sending of multiple orders up to a cap of $10000.

Money orders tend to have a very low maximum sending limits. For example, USPS has a transfer limit of $700 for international money orders and allows the sending of multiple orders up to a maximum limit of $10000. Within the U.S., you can send up to $1000. 

International money orders might not be ideal if you intend to send significant sums of money abroad.

Pros and Cons of International Money Order

ProsCons 
Convenience: You don't even need to have a bank account. You can pay with cash, a debit card, or a traveler's check Expensive: A money order must be purchased for a cost, and frequently there are recipient fees as well. Sending money abroad using international money orders is generally expensive. 

Safer than cash. You can have them replaced if they are lost or stolen, so you won't have to worry about money being stolen.


 

Both the payer and payee of an international money order must sign the money order, which is added security.

Poor exchange rates: With money orders, you often get poor exchange rates, which may limit the amount of money your recipient can get.
The funds are guaranteed. A money order won't bounce because it has already been paid for. So, Slow: International money orders have to be mailed to the recipient, which might delay delivery depending on the countries involved and makes them slower than online transfers.

 

 

 

 

 

 

 

 

 

 

 

 

Do Money Orders Expire?

The answer is no; money orders do not expire. But confirm with the issuer. 

There could be restrictions on some providers. According to Western Union, depending on the state of purchase, a non-refundable service charge will be subtracted from the principal amount by the terms and conditions of the money order if you do not use or cash the money order within 1 to 3 years of the purchase date.

How to Send an International Money Order?

A money order can be mailed the same way a check would. Add postage, place the money order in an envelope, and write the recipient's address as well as your return address on the front. Alternatively, you can give the money order in person.

Imagine you choose to use USPS to mail an international money order. Make sure the recipient's country accepts money orders before sending one. Only 27 nations accept USPS money orders. The list can be found here. Therefore, it is still in your best interest to find out if the country to which you are sending it accepts them.

Know that money orders have certain limits; for instance, the USPS has a purchase limit of $700 for international money orders.

Your bank and other international money transfer providers like Western Union and MoneyGram are other places where you can buy international money orders. Find a service provider that is both affordable and convenient by doing some research.

Next is to gather all the information: the payee's name and address, how much you are sending, and your personal information.

Here are the steps to take you through the process:

  • Fill out the form
  • Sign the money order where it says "purchaser's signature" to make it cashable by the recipient. 
  • Pay the dollar value of the money order plus the issuing fee 
  • Pay for the order with either cash, debit card, or traveler's check. 
  • Mail it to an address where they want to receive it. 
  • Keep your receipt to track the money order.

How to Fill Out a Money Order?

Fill in the blanks on the money order with the following specific information:

  • Name of payee/recipient
  • Address of payee
  • Date of purchase 
  • Amount to be paid
  • Your name and address 
  • Reason for payment
  • Your signature 

Follow the steps on how to fill out a money order: 

  • On the line that begins with "Pay to" or "Pay to the Order Of," provide the name of the individual or business that will receive the international money order. Do this first so that no one else can find the money order and cash it if you misplace it. Because the recipient's name cannot be changed after the money order is ordered, be sure you have the right spelling.
  • In the "From" or "purchaser" field as well as the address field, enter your information.
  • Fill in the reason for payment
  • Sign on the front of the money order. You should not sign the back because the recipient must sign there to cash it.
  • Keep the receipt. If the money order is lost, destroyed, or needs to be replaced for any other reason, you will need to track it down.

How Much Is a Money Order?

Although the cost of international money orders varies, they often cost more than $10. 

For instance, a USPS international money order has a $49.65 issuing cost as well as a country-specific processing fee.

The recipient can be charged a fee when cashing or depositing the money orders in their country.

However, if you want to send a large sum of money, you can buy additional money orders with a $700 value. Accordingly, it would cost more than $100 in money order fees to mail money orders worth $7,000 through the USPS.

Additionally, there is a currency conversion cost when sending money abroad. This will apply when the recipient cashes the money order or deposits it in their local account. 

Again, the exchange rate margin depends on many variables, such as the service you use, the nation to which you are sending money, the currency pairs, and the mode of payment, to name a few. 

Compared to other options on the market for international money transfers, international money orders have bigger exchange rate margins, meaning you get less money for your dollars. 

USPS Fees are based on the money order dollar amount.

Dollar Amount Fee
$0.01 to $500$1.65
$500.01 to $1,000$2.20
Postal Military Money Orders$0.55
International money order (up to $700)Varies. Issuing fee is $49.65, the processing fee is based on the country.

Can You Buy a Money Order With a Credit Card?

Some service providers let you buy money orders with credit cards. There can be an additional charge for you as it is treated as a cash advance by the credit card issuers. USPS doesn't allow you to purchase money orders with credit cards.

How and Where Can I Cash a Money Order?

Cashing a money order goes pretty much the same way as cashing a check. A money order can be cashed or deposited into a bank account.

You can cash a money order at your bank, the issuer, cash-checking businesses, and many retail establishments, but there can be a cost, depending on where you cash a money order

A USPS money order can be freely cashed at a post office. Alternatively, you can cash it for free at the issuing institution and deposit it without paying any fees into your bank account.

Rural mail carriers may be able to cash money orders while they are out on their routes if they have enough cash on hand. 

Money orders can be canceled, so it's crucial to cash and deposit them as quickly as you can, especially if you don't know the person or entity that gave the money order.

Here is how to cash a money order:

  • You will need to provide a government-issued photo ID when cashing the money order
  • Do not sign the money order before you are ready to cash or deposit.
  • You have to sign it in front of the teller or retail associate.

How to Track Money Orders?

To track your money order online through the issuer's website, you will need the following information.

  • Serial number (available on the receipt you got from the issuer)
  • Dollar amount 
  • Issuing location (e.g., Post Office number)

You will know from the money order tracking information if the money order has been cashed or not. You can cancel it if it has not been cashed. 

How to Avoid Money Order Scams?

Many people fall victim to money order scams often. 

In many of these scams, the victim will frequently get a phony money order for a large sum of money along with a demand for a portion of the money back.

When the victim learns that the money order is fake, they may have already wired funds to the con scammer.

Because of this, it's important to carefully examine the money order before accepting it. 

There are several key things to look at to spot a fake one. Each money order has specific marks and designs to prevent fraud and can help you identify the fake one. 

For instance, real USPS money orders feature the watermark of Benjamin Franklin repeated from top to bottom on the left side (see circle 1 in the image below), and to the right of that watermark, a vertical multicolored thread with the letter "USPS" weaves in and out of the paper (circle 2).

The dollar value in circle 3 on the image may have been removed if it is discolored, which would indicate fraud.  

The dollar amount should be printed twice (circle 4 on the image). The dollar value should not exceed the transfer limits. 

Domestic money orders are limited to $1,000, while foreign money orders are limited to $700 ($500 for El Salvador or Guyana).

If you suspect fraud, you can call the U.S. Postal Inspection Service at 1-877-876-2455. Or in case you suspect a fake money order, you can call the Money Order Verification System at 1-866-456-7822. 

Source: USPS

Money Order vs. Cashier's Check

Though they are similar in many ways, they differ in many ways.

Money Order Cashier's Check 
Do not require a bank account to buy a money orderNeed to have a bank account at the issuing bank to order the check.
There is a limit on the amount. No limit
Many Places Can only get it at financial institutions.
The money order can't bounce.Can bounce due to insufficient funds in the bank account.
The "Pay to" line is blank. So can be filled in with any person, and the payee can cash it. The receiver's name is filled out by the bank, so can be cashed only by that person.
Less expensive-Ideal for smaller payments.More expensive-Ideal for large payments.
Issued at a grocery store or check-cashing business.Considered safer or more credible than a money order as it is backed by the bank that issued it.
Easier to replace and cancel if they are stolen or lost.You must request a new check from the bank.

Bottom Line

Money orders are a popular and affordable form of payment. Money orders are still used for numerous transactions despite some of their shortcomings. 

There are many ways to send money abroad if money orders are not your preferred method of payment. This includes wire bank transfers and using international money transfer companies. Find the choice that is best for you by doing some research and taking into account the ease, speed, costs, exchange rate, offers, and discounts when picking the best deal on your transfers.

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And the paycard fees are becoming more transparent and competitive.While paycards can be challenging at times, especially when you are employed in multiple jobs and have a separate paycard with each employer, your funds are scattered in multiple cards so it becomes difficult to manage your finances. Some may prefer to put all their money in one place, like a checking account.However, if you can't open a bank account, a paycard is a great option to get paid. Read the fine prints before signing up for a paycard and know the potential fees that come with it.

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