Have you ever tried using a money order to pay for anything? If not, you may want to consider it as another alternative form of payment instead of paying with cash or a personal check. In the age of electronic payments and apps (such as Venmo and Paypal), this payment method may seem obsolete. However, there are actually a number of instances where using a money order makes sense. But first, let's discuss what it's about and the places where to get money orders from.
What Is A Money Order?
To put it simply, a money order is a printed paper document which is used to pay a specified sum. You might be wondering where to get money orders from, and the majority are issued by the Post Office, a bank, or a credit union; but nowadays, you can also get money orders from money transfer agents at convenience stores and supermarkets.
Because a money order is prepaid, the funds are guaranteed. A money order is also a safe and secure way to pay since it usually requires information (such as your name, address, and phone as well as the recipient's name).
As a financial document, a money order is generally difficult to counterfeit because of some security features:
Costs And Restrictions
A money order costs about $1.65 at the United States Postal Service, while other establishments may charge more. Money orders usually have a $1,000 limit, so if you're paying a larger amount, you will need to purchase several money orders. A receipt is provided for a money order to serve as proof of payment for the purchaser. The payer needs to keep this receipt for his or her records as evidence of payment because, unlike a personal check, a money order is more difficult to trace (if not impossible). The receipt also contains tracking information to inform the payer that the money has been received by the payee.
A Brief History Of The Money Order
First offered in 1792 by a private firm in Great Britain, money orders were initially expensive and were not popularly used. A transfer of ownership to another private firm in 1836 significantly lowered the fees, which boosted the use of the money order system and made it more profitable.
This led the US Post Office to take over the system in 1838: a move which reduced the fees even further and encouraged more usage from the public. A drawback to the system, where there was a need to send an advance to the paying post office before payment could be given to the recipient, was remedied by the establishment of the Postal Order System on January 1, 1881.
To prevent robberies, Postmaster-General Montgomery Blair instituted the use of money orders in the United States Postal Service as an alternative to sending currency through the postal system.
What Can You Use A Money Order For?
In the following situations, it is actually more sensible to use money orders as a mode of payment than cash or personal checks:
1. As an Alternative When Mailing Money
A money order is definitely safer than sending cash or checks in the mail. When cash is stolen from the mail, there's really nothing else you can do about it, while a money order can be canceled and replaced in the event that it gets lost or stolen.
2. As an Alternative Payment Method If You Don't Have a Bank Account
If you don't have a checking account, money orders can be a good alternative for paying for rent or utility bills. They can also be used to make payments for personal and business debts.
3. As an Assurance of Guaranteed Funds
Even if you have personal checks, a money order gives the assurance of guaranteed funds for the recipient since it has been prepaid. On the other hand, a personal check may bounce due to insufficient funds. This is why some sellers and establishments do not accept personal checks as payment but will take a money order.
4. As a Means to Avoid Sharing Sensitive Information
By using a money order, the payer will be spared from sharing vital and sensitive information, such as the bank account numbers and routing numbers printed on personal checks, which may be compromised).
5. As an Inexpensive and Convenient Way to Send Money Abroad
This is especially helpful when making international payments to pay for goods or services or if you're sending money to a family member or a loved one. The recipient will be able to cash the money to the local currency as well.
Where To Get Money Orders
Money orders are available at the United States Postal Service offices, banks, credit unions, and money transfer agents or money stores (i.e. Walmart, Western Union, payday loan shops, convenience stores, grocery stores, pharmacies, retailers, supermarkets, etc.) Check your area for possible locations on where to get money orders from.
Of course, knowing where to get money orders is not the only thing that matters. Knowing how much it will cost can also help you save on a few bucks when purchasing one.
United States Postal Service
Postal money orders are probably the safest and most reliable, especially when it comes to international money orders. However, not every USPS office provides this service so you will need to call your local post office ahead of time.
Banks And Credit Unions
Banks and credit unions are just as reliable as USPS, however they charge more for money orders (between $5 to $10). If you have a checking or savings account, the fees are often reduced or may even be waived at times. Banks and credit unions are especially attentive when it comes to customer service, so it will be worth the extra bucks. But if you're planning to do frequent purchases, it's probably not advisable to get money orders from banks and credit unions all the time.
Money Transfer Agents
This is probably the most convenient way to obtain a money order. They are usually available at the customer service desk in supermarkets, grocery stores, pharmacies, retailers, etc. It usually costs about $1 to purchase a money order from money transfer agents which is even cheaper compared to USPS.
Money Transfer Stores
Money transfer stores are establishments which deal mainly with money and doing money orders. Just like money transfer agents, money transfer stores offer relatively lower prices as compared to USPS, banks, and credit unions.
How To Buy Money Orders
When purchasing a money order from a bank, you can transfer funds from your checking or savings account. If you're getting one from a retailer or a convenience store, you can use your debit card to pay. A cash advance on your credit card will work too, but we would advise against it because of high-interest rates and additional fees that a credit card cash advance may incur.
You will be asked the amount of money you'd like to put in the money order. Fill out the money order as you would a check by entering the payee's name, address, account number, and the amount you are paying.
It's good to know that there are now several places where to get money orders from. However, it's also important to know if the one you're going to is safe and reliable. The United States Postal Service, banks, and credit unions are our best bet when it comes to where to get money orders.
Money orders can be an inexpensive way to pay for your rent and bills, but they should not take the place of having a regular bank account. Remember that each money order charges a fee, so it's not practical to use them frequently. Additionally, because a money order has a limited maximum value, it would be unwise to pay for large purchases using several money orders.
To spare yourself from being scammed, avoid paying someone you don't trust with a money order so you wouldn't have to deal with reversing or canceling the payment. You should also avoid sending money back to someone who overpaid with a money order.
If you're the one receiving a money order, verify the funds on the money order before taking it to your bank. For money orders you've deposited to your bank account, make sure that the funds have been obtained by your bank before spending the money.