What Is a Money Order?

A money order is a method of paying for something in cash using a third-party check. You pay by money order, the third party issues a check that you can deliver or send to someone else. This person deposits the money order into your bank account or exchanges it for cash at a business or post office.

Definition of payment order

A money order is a paper document, similar to a check, that is used as payment. You purchase a money order by delivering cash or other guaranteed funds to a teller, plus a service fee.

They print the order, you fill in some information and send it or give it to whoever is negotiating.

How a money order works

You can purchase a money order from several sources, including:

Supermarkets and convenience stores
Banks and credit unions
Check cashing, money transfer and payroll loan stores
US Mail
Money orders have a maximum limit, generally $ 1,000 per money order.

If you use your bank, you can transfer funds from your checking or savings account. At a retailer, you usually pay by cash order or debit card.

Convenience and cost can determine where you buy. Prices are usually lower at post offices, supermarkets, and convenience stores - about $ 1 per money order. Banks and credit unions can charge between $ 5 and $ 10.

If you receive a money order, you can cash it or deposit it as a check. Similar to a check, you sign the back of the money order. It's best to pick up money orders from the same company or entity from which they were purchased, such as Western Union, a MoneyGram branch, or the bank or credit union that issued them.

If you do not need money at this time, it is advisable to deposit funds into a bank account as soon as possible. It's easy to misplace, lose, or forget for a while.

Do i need a money order?

Here's why you might want to use a money order:

It's a safer alternative to cash - a money order can be placed with a specific person or organization, reducing the risk of theft. If a money order is lost or stolen, you can cancel it and get a replacement. If you lose money, it will definitely be lost and sending money through the mail is very risky.

No bank account required - If you don't have a bank account or don't want to use one, money orders are useful for making payments. You do not need a bank account to obtain a money order.

They offer anonymity - When you write a personal check, that check contains confidential information. For example, checks often show your address, phone number, bank account numbers, and the names of joint account holders (such as your spouse or partner).

If you don't know or trust the person paying, a money order only gives someone your name and money.

A seller may require one - some sellers require you to pay with a money order if they prefer not to risk accepting a personal check.

Convenient for Sending Money Abroad - If you need to send funds abroad, money orders are a safe and inexpensive way to do so. The recipient can easily convert a money order into local currency, and USPS money orders enjoy a good reputation in many countries around the world.

Money order alternatives

Save your receipt and any other information about your purchase. If something goes wrong, you will need this information to track or cancel your payment request.

Other options offer "guaranteed" funds, and some are even more secure than money orders.

Bank checks

It is important to correctly complete a money order. Tell the money order issuer how much you would like it to be and they will print it for you. You must write the name of the entity to which you are paying on the line that says "Pay per order". You must sign it or the person trying to remove it will not be able to use it.

Bank checks are similar to money orders. They are also paper documents issued to a specific beneficiary and guaranteed by the issuer.

However, only banks and credit unions issue bank checks. Convenience stores and money stores or financial firms that they partner with generally don't. Also, if you need more than $ 1,000, bank checks can be written for more than money orders.

Bank transfers

An electronic transfer is an electronic transfer of guaranteed funds. Again, sellers can be sure that they will receive the promised money. Bank transfers are more expensive (around $ 30 to $ 40 in many cases) and more complicated, but they cannot be forged or canceled like money orders.

You can pay utility bills, insurance premiums, and cell phone charges with money orders. However, the fees and the time required to purchase them increase over time.

Electronic payments

Electronic payments of unsecured funds are also an option. If you're paying bills, your bank's online bill paying service can send funds almost anywhere, usually for free. Even if you don't have a bank account, many prepaid debit cards offer the same service, or you can pay with your card number.

Online services and applications can also send money for free. However, it is useful to be careful when using electronic payments, as the information can be traced.

Verifications

Personal checks, while old-fashioned, are usually good enough. Billers such as utility companies and telephone service providers still accept personal checks. However, online retailers may not accept them by requesting a money order or other payment method.

Money Order Reviews

Money orders are traditionally considered safe, but criminals use them in schemes to steal money. In fact, the perception that they are safe is exactly what makes them perfect for scams. There are many scams made through money orders. However, some common warning signs can help you avoid problems:

Never return "extra" money to someone who pays too much with a money order; it is almost certainly a scam. Be careful when sending extra money to "senders".

Check the funds for money orders you have questions about before taking them to the bank.

Avoid paying someone with a money order if you think you will ever need to reverse the payment. You can only cancel money orders before they are cashed.

The relatively low maximum amount of $ 1,000 (or $ 700 for USPS international money orders) limits what you can use for money orders.

They tend to spend more time, even when it is easy to find a place to buy them. You may need to withdraw cash, wait in line, wait for a customer service representative to complete the transaction, and mail the payment request.

Money orders are generally considered safe, but some financial institutions (such as insurance companies and brokers) do not accept them because they can be used in money laundering operations.

Mobile banking is very popular and convenient these days, but banks may not allow you to use your mobile device to deposit money orders, although they do accept written checks.

We hope you enjoy watching this video about what is money order

Source: Financial Education

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