Money Order Basics

A money order is a financial piece of paper similar to a check, but you don't need a checking account to get one. Think of it as a cashier's check that you can buy in places other than a bank. When you purchase one, you typically pay for it with cash. It is valid for the amount printed on it, and you should protect it the way you would cash.

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The post office is the primary place to buy a money order. You can also buy them at any Western Union office. Many supermarkets, big box stores and convenience stores also sell money orders, as do banks and credit unions, and payday loan and check-cashing facilities. Each of these establishments also guarantees the money being transferred by means of the money order — which is safe for them to do, because you pay them the full value of the money order when they issue it.

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You can expect to pay anywhere from less than a dollar to up to a few dollars as a fee for a money order — plus, of course, the amount of money you're transferring via the money order. Unless you're entitled to free cashier's checks at your bank, money orders are one of the least expensive ways of transferring money, especially if you need to send cash internationally.

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Money orders are handy ways to make payments when you can't or don't want to use cash or a personal check. If you're making a purchase where the seller won't accept a check, a money order is a handy way to pay. If you don't have a checking account, you can pay your bills via money order. Sending cash can be risky, and sending a check means that anyone who sees it has your banking information, but sending a money order provides an additional level of security, since only the intended recipient can cash it.

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If you're purchasing a money order at your bank or credit union, they'll take the money right out of your account. Anywhere else, you either have to pay with cash or with a debit card. It's also possible to pay with a credit card, but your credit card company will treat the transaction as a cash advance, so you'll pay very high fees, plus interest.

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Tell the establishment issuing the money order how much you need and give them the money. Once you do that, they'll print the money order for the amount you requested. You need to write the name of the person receiving the money order after "Pay to the order of." Until you do this, the money order is like cash, and anyone holding it can cash it.

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Just as you can put a stop payment order on a personal check, you can also cancel a money order. However, you must have the receipt for your money order, or the process will become significantly more difficult. Go back to the place where you purchased the money order, if possible, to start the cancellation procedure. Expect to pay a fee of anywhere from $6 to $30.

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You'll have the least hassle if you take your money order to a branch of the establishment that issued it. If it's a postal money order, head to the post office. If it came from a bank, go to a branch of that bank. Convenience stores and grocery stores that issue money orders may be willing to cash them as well, but they're likely to charge a fee for the service. You can also always deposit a money order into your bank account; the bank will treat it as cash.

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Generally, money orders can only be used for amounts of $1,000 or less. If you need to transfer more than $1,000, you may have to purchase multiple money orders — which means you also have to pay multiple fees. When you need to transfer significantly larger amounts, look into buying a cashier's check instead.

Yes, you can track a money order. Look for the tracking number on your receipt, and use it to make sure the intended recipient received the money you sent them. If it isn't received, it's time to go back to the place where you purchased the money order and start the cancellation process.

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