There are times when it is unsafe and impractical to use cash, such as when sending payments through the mail. Checks are also not a good payment option sometimes. This is when money orders come in handy. Money orders have many benefits but there are many scams with money orders to take your money.
Here are some of the important things you should know about money orders, how they work, how to fill them out, and how to protect yourself.
Reasons to Use Money Orders Instead of Cash, Checks, or Credit Cards
- Sending money to someone through the mail
- Person accepting the money does not take personal checks or credit cards.
- The money must be certified to be there before a sale or transaction takes place
- To help the recipient of the money order be more comfortable that the money is actually there
- To have less of a trace of the flow of money (somewhat)
While there are many reasons to use money orders instead of alternative means of payment, there many reasons not to as well.
In this article, we will cover just about everything you need to know about money orders before you use them.
How Does a Money Order Work?
A money order is a piece of paper that is considered a safe alternative to cash or personal checks.
You will specify the receiver of the money order, and you and the receiver should sign for the money order to be considered valid.
This helps cut down on theft. You will also need to pay for the money order at the location you get one like the post office, Western Union, or Walmart.
Most money orders have a limit of $1,000.
When you buy a money order, you will make an upfront payment of the full amount together with a small fee.
Once you have verified that the specified amount is correct, you have to fill up the front part of the money order with your name and contact details together with the recipient’s name and contact details.
There is a memo line that lets you indicate the purpose of the money order. You then need to sign on the front just like you do on a personal check. Make sure that you always keep your receipt with you.
This can be used to track and check if the order is already received, and it also serves as a proof of payment.
For instance, say that you still owe $500 in rent on the first of the month, and your checking account is not yet active. You need to go to the nearest store selling money orders, buy one for $500, and give this to your landlord to serve as your payment for the rent.
Your landlord will then need to deposit in his bank account as if you had paid using cash or a personal check.
There is no doubt that money orders can be useful during those times when you cannot or do not want to use cash or check to make payments.
How to Get a Money Order
Here are the best places where you can get a money order:
Go to your bank.
When you have your own bank account, the simplest and easiest way to get a money order is to go to the bank teller and ask for one.
There are banks that might charge a small fee, although most banks offer these for free.
There are banks that offer their clients cashier’s checks that are almost the same as money orders. Check that your recipient will accept a cashier’s check before you buy one as an alternative to a money order.
Most banks also keep a record of every purchase of a money order you make, which can be helpful in case the money order is lost or stolen.
Local businesses in your area.
Places such as Walmart, grocery stores, and drugstores offer money orders for a fee. You might want to shop around first and go for the one that offers the lowest fee.
There are several establishments that put a limit on the money order amount as well. If a cap is being implemented, you can buy several money orders until you reach the total amount you need.
The United State Post Office (USPS.com)
The United States Postal Service issues money orders that are often replaceable if they get damaged, lost, or stolen. Below are the benefits applicable to money orders bought from the USPS:
USPS money orders are cashable in 29 different countries. You can buy money orders from USPS using your debit card.
Check into money-oriented establishments.
Credit unions, Western Union, and other places that deal with money often issue money orders.
How to Fill Out a Money Order
How to fill out a money order is not unlike how to fill out a check.
Below are the pieces of information you need to provide when filling out money orders:
Payee information
Start by writing the name of the specific business or person that you will pay using the money order.
The section can be labeled as “Payee” or “Pay to the order of.”
Avoid making a money order that is payable to cash since you might end up losing the funds if the money order is stolen or lost along the way.
Address information
There are money orders that have a designated space where you need to put your own mailing address in the event that the recipient needs to contact you regarding the payment.
But if you have concerns regarding your privacy, you can opt to omit this particular information. You can ask the issuer and recipient of the money what is needed.
For money orders from USPS, the address line found on the left part is for the address of the recipient.
Meanwhile, other money orders use the space for your own address so that your address and that of the recipient are both included.
Additional details
There might be a need to include other pieces of information on your money order for the payment to be handled correctly.
For instance, you can write the order or transaction details, your account numbers, and other notes to help your recipient recognize the purpose of the payment.
This part could be labeled as “Re:” or “Memo.”
If the money order doesn’t have any space for these additional details, you can write them on the front part of the paper.
Signature
There are money orders that will require you to sign them. Look for the section marked as “Drawer,” “Purchaser,” or “Signature” on the front part of the paper.
Never sign or write anything on the back since this is the place where the recipient needs to sign for endorsing the money order.
Once you have finished filling out the money order, make sure that you keep the carbon copies, receipts, and any other document that you will receive when you buy the money order.
This is in the event that something goes wrong with the payment. You might also need these documents if you want to cancel your money order.
They can also help if you want to track or confirm a payment.
Places to Buy Money Orders
You Can Get a Money Order at Walmart
A money order at Walmart is a prepaid bank certificate or check. For you to get money orders at Walmart, you need to pay the amount of the money order to its issuer together with a small fee.
You will then be issued the money order that will usually include the name of the issuer and recipient at the same time.
Among the primary advantages of money orders is the fact that these are paid ahead of time.
This means that a money order will not have any risk of bouncing, unlike personal checks.
A money order is also issued with numbers that make it traceable. Usually, a money order can be canceled or reissued if it gets stolen or lost.
What Is the Money Order Walmart Fee?
How much is the cost of a money order from Walmart?
The good news is that the store charges a cheap handling fee as low as 70 cents. The price is a competitive one.
By comparison, the US Postal Service charges $1.20 for their money orders amounting to $500 while money orders priced at $500 to $1,000 have a fee of $1.60.
Get a Money Order at Western Union
Money orders at Western Union are a great and easy way to give certified funds. Here are the steps to get a money order at Western Union:
- Go to the nearest participating location of Western Union.
- Buy a money order for the corresponding principal amount that you need.
- Fill out the information on the “Payee” section.
- Sign it and send the money order to the recipient.
- Don’t throw away your receipt until you have confirmed that the money order was received by the payee.
How Do You Cash a Money Order?
Once you receive a money order, you can either deposit it into your bank account or cash it. Until you cash a money order, it will be nothing but an ordinary piece of paper.
There are many locations where you can cash money orders, such as convenience stores and banks. Below are the steps you should follow to cash a money order:
- Bring the money order to a location that you know cashes money orders or checks since money orders usually get treated similarly to checks. The most common options include check-cashing stores, grocery stores, credit unions, and banks.
- Endorse your money order like you endorse a check by signing the back side with your name. Wait until you get inside and are ready to give the money order to the customer service agent or teller before you sign it.
- Show your valid ID to verify that you have been authorized for cashing the money order. The best options you have are government-issued photo IDs like a passport, military ID, or driver’s license.
- Pay the fees associated with the service. The costs may reduce the amount of cash that you receive.
- Get the cash and put it securely inside your wallet, purse, or pocket before you leave the customer service counter.
What Is a Money Order vs. a Cashier’s Check?
As mentioned earlier, a money order is a piece of paper like a check that lets the person named receive a particular amount of cash.
A money order is cheap, widely available, and offers a more secure way of making big purchases compared to paying with checks or cash.
Money orders are also good alternatives that you can use for payment purposes when you don’t have a checking account.
On the other hand, if you are looking for something that is more secure than a personal check, a good money order alternative is a cashier’s check. A bank representative signs the cashier’s check.
This is then drawn from a bank account once the funds have been transferred from your bank account.
Unlike money orders, there is no cap on the amount, provided that you have the required funds.
From the perspective of a recipient, a cashier’s check is preferable because it comes straight from the bank. This means that they will be able to receive the money faster and with less risk of fraud.
But a cashier’s check is more expensive than money orders with the average price of $7 to $10. You also need to have your own account at the bank where you will get the cashier’s check.
Can You Get a Money Order Online?
It doesn’t matter if you prefer to pay using a money order or if you are required to do so by a seller, money orders may be inconvenient at times.
There are many places where you can purchase money orders such as banks, post offices, and grocery stores.
However, online money orders never gained much traction.
Why is it that you cannot buy a money order online?
Because vendors aren’t willing to face the risks of selling money orders online. Money orders are guaranteed payments, but it is difficult for issuers of money orders to verify your payment method and identity online.
What to Watch Out for When Getting a Money Order
While money orders are generally safe methods of payment, they can still be used for fraudulent purposes. To stay protected, here are things you should watch out for:
- Verify the funds. If the money order is not cashable at the place of the issuer, contact the issuer using a publicly available phone number to check its legitimacy.
- Avoid exchanging your money order with strangers. It might not be possible all the time, but if it is, request for electronic payment or any other means.
- Watch out for red flags. These can include visual cues like amounts over $1,000 or missing watermarks and sending back extra money to someone claiming that they made an excess payment.
Money orders have their own niche in the personal finance world. They can be your best option if you are looking for a secure alternative for sending cash aside from using a check.
Money orders are affordable, and you can find them in places that you visit on a daily basis.
Money Orders Can Be A Scam
When you send money with a money order, you need to know that the money is no gone. You can not ever get it back and there is no safe guards for you with the system.
If you send money to someone you know and trust, you will be completely fine.
If you send money to a person you don’t know or trust, you could be taken for a scammer.
I was personally taken for $900 one time using money orders.
It was horrible. Basically, my business got a call that an employee was arrested and she needed to be bailed out.
The phone call was a scam used to get money out of me. After I sent the money, I realized I was being scammed and was not able to get the money back. The person stole my money by deceiving me and taking my money.
Many Different Scams With Money Orders
There are many different ways people try to scam you out of your money with money orders. Here is a short list of just a few of the types of scams out there:
- Bogus buyer. This scam is all about buying something from you with a fake money order. After you give the item to someone else, you go to cash the money order to then find that it is a fake money order. Now you are out the money and the item you are selling.
- Overpayment ploy. This is when the fake buyer sends you a money order for MORE than you are asking for the item you are selling. Then, the thief asks you to give them the difference with the item you are selling to them.This is when you give them the extra money after you cash it and then find out the money order is fake. Only after the person is gone with your money and the item when the bank tells you the money order did not go through.
- Bogus buyer’s remorse. This is similar to the overpayment ploy but instead, the thief tells you they changed their mind and want their money back less a small fee for your troubles.So you keep 5% of the money and send back 95% of the money. Then you find the bank says the money orders are fake and you are out the money.
- Rental reversal. Similar to the bogus buyers remorse but is with real estate. The thief uses the security deposit as a ploy for you to cash the check and have you give back the rent since they can’t move in.You would keep the security deposit but refund the rent. Then the bank informs you that your money is gone and the money orders were bad.
- Deposit assistance. This is where the person asks you to deposit their money order for them because they don’t have a bank account. You are supposed to cash it and keep a portion for your troubles.Then you find out that the money order is bad and you are out the money.
These are just a few of the many money order problems. Never send money orders to someone you don’t know and trust and never fall for these scams by waiting for your bank to say the money is cleared and you have the money in your account.