A money order is a guaranteed paper alternative to cash and personal checks that allows the sender to send money and the recipients to receive the specified amount in cash. A money order will work as a much more secure alternative to cash as it requires a signature to be valid, thus cutting down on theft and fraud.
Money orders also typically have a $1,000 limit. They can also be prepaid at locations such as Walmart, Post Office, Western Union, or at your local bank.
Now that you have a general idea of what a money order is, how exactly does it work? Let’s go into that.
How much does a money order cost?
Depending on where you get the money order, different providers charge different fees. If your money order is domestic, then you can expect to pay anywhere between less than $1 and $5.
Some providers also provide money orders free of charge. Money orders typically have a $1,000 limit. If you want to send more than $1,000, then you might end up having to get multiple money orders.
If that’s the case, then your fees might add up since each money order has its own separate fee. Definitely keep that in mind.
Where can I get a money order?
Fortunately, there are a number of places that you can get a money order. Most Walmarts, Western Unions, convenience stores, and the post office will be able to issue you a money order.
Another great place to go get a money order is from your local bank. It can be as easy as going through the drive-thru and requesting a money order.
Can I buy a money order using a credit card?
Most providers will not allow you to use a credit card to purchase a money order. For the most part, they will accept cash and debit cards.
If your provider accepts credit cards to buy a money order, that might not be a good idea. Credit card issuers typically treat money orders as a cash advance. This will end up costing you much more in credit card fees.
Depending on your bank, some banks charge up to 20% in fees if they detect a cash advance. In that case, getting a money order using a credit card will become quite expensive.
How do I use a money order?
When you go and purchase a money order, you first let the issuer know who the recipient will be. You typically fill in your name, the recipient’s name, and their contact information.
Once they have this information, you will pay any necessary fees and you will receive a copy of the money order and a receipt. Make sure to keep this receipt safe in case you lose the money order. Make sure to sign it to validate it. Once that is done, the money order is ready to work and can be handed over to the recipient.
As an example, let’s say you need to pay $950 for rent. You will simply have to head over to a store or post office that issues money orders. You purchase one for $950 plus any fees, and write the recipient has the landlord.
Once you have the money order in hand, you will hand it to your landlord and they will go cash it to receive the cash equivalent. Done.
Where can I cash a money order?
If you are the recipient of a money order and want to cash it in, you have a few options.
The first, and best option, is to go cash the money order where it was issued. If the money order was issued at a bank, it’s much easier and faster to go cash it out at the same bank. If it was issued at a post office, then cashing it at a post office would also be the quickest approach.
You should keep an eye out on potential fees. Some places charge fees when cashing out money orders, but most do not. Once you cash in your money order, you handed over to the teller and they give you cash.
What do I do if I lost a money order?
If you realize that you have lost your money order before handing it over to the recipient, and it’s important that you cancel it as soon as possible!
Once a money order has been cashed, there is no way to reverse the transaction. It’s as good as cash.
If you are diligent enough and get the money order canceled before being cashed, you can usually get a replacement or a refund. For the cancelation and refund process to work, you will need to bring the original receipt that you got when you received the money order. It will also be easier if you went back to where you originally purchased the money order.
Replacing a lost money order might also cost you some money. Depending on the issuer, Western Union, for example, charges $15 to replace a lost money order. It might also take a month or more to receive the replacement.
Are money orders safe?
Money orders are very safe and are literally as good as cash. The only thing to remember is that once a money order is cashed, the paper itself becomes worthless.
It can only be used once to cash out. Before it is cashed out, it’s vital that you keep the money order paper safe. When cashing out a money order, make sure you do it a legitimate establishment to avoid any potential fraud.
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