When you need to make or accept a payment but cash, check, and electronic transfers don’t fit the bill, a money order is a secure and convenient solution. Available at more than 200,000 U.S. locations, money orders are also easy to buy or cash.
A money order is essentially a paper check that can’t bounce because it’s prepaid. You can buy one at any U.S. post office, at Western Union and MoneyGram outlets inside Walmart, CVS, 7-Eleven, and other grocery, convenience, and drug store chains, and at most banks, credit unions, and check-cashing stores.
When Should I Use a Money Order?
In situations where paying with cash, check, or a digital app isn't ideal — or even viable — a money order might be the best answer. Like a check, money orders are written directly to individuals or companies by name, requiring endorsement and identification to cash them. This makes money orders much more secure than cash, protecting the funds in case of loss or theft.
Money orders played a key role in U.S. history. During the Civil War, thieves constantly robbed post offices and delivery runs to grab cash being sent all over the country. Abraham Lincoln’s Postmaster-General came up with the solution of money orders.
Although personal checks can offer some of the same security benefits, money orders offer the advantage of being prepaid. Assuming you have a legitimate money order, cashing it is risk-free since the sender has already provided the funds.
By contrast, a personal check must be accepted on the good faith that the sender’s bank account has sufficient funds or overdraft protection to cover the check. If not, the payment bounces and the recipient is left short — and often has to pay a bank fee on top of that.
Safer than cash from theft or loss
Can’t bounce like a check for insufficient funds since the amount has been prepaid
Cheaper than a bank's certified or cashier’s check
Requires an in-person visit to a money order dealer
Requires you pay a purchase fee, unlike personal checks
Not allowed for mobile deposit by all banks
The advantages over cash and check result in many situations in which money orders are preferred or even required, such as when:
- The recipient isn’t comfortable trusting a personal check, due either to a lack of familiarity with the sender or a bad past experience with previous payments.
- The sender doesn’t want to reveal their address or checking account number.
- It’s crucial to make the payment without any risk of being rejected for insufficient funds.
- The payer doesn’t have a checking account, and cash isn’t practical.
Certified and cashier’s checks are potential alternatives. But banks generally charge higher fees for the added security. And you have to go to a bank during banking hours to obtain them, offering fewer time and location options. So if a money order can handle the job, it can be a more flexible and economical choice.
- Money orders offer an easy way to exchange funds safely when paying in cash isn’t practical, using a personal check isn’t accepted or desirable, and when a non-digital payment is required.
- Although money orders are generally inexpensive, they almost always involve a purchase fee, and sometimes a redemption fee for the recipient.
- Money orders are an attractive tool for fraudsters, so it’s important to check the visual security features on any money order you receive.
Where You Can Buy Money Orders
Once you’ve decided you need a money order, the next decision is where to pick one up. Though online providers are emerging, money order purchases are still mostly a paper and in-person industry. But you won’t be hard-pressed to find a money order location near you.
In the U.S., money orders can be bought or redeemed at more than 200,000 locations, including 30,000 post offices, almost 10,000 CVS stores, and 6,300 Walmart locations, as well as Western Union and MoneyGram outlets inside tens of thousands of 7-Eleven, Publix, Kroger, K-Mart, Safeway, Meijer, and other retail locations. Most of the nation's approximately 100,000 bank and credit union branches also offer money orders.
Every money order comes with a detachable stub or receipt that allows you to track it after it's delivered or sent.
As with any other consumer purchase, you’ll be wise to pay attention to pricing, because not all money order sellers charge similar fees. Walmart is one of the cheapest options, charging a maximum of 88 cents per money order. The U.S. Postal Service charges either $1.25 or $1.70 per money order, depending on whether the amount is above or below $500.
Pricing at other locations can vary greatly, so it’s best to check in advance. For instance, going to a bank or credit union where you are a customer could mean you’re able to buy money orders for free, or you may instead find the cost is $5 or $10 unless you’re in the highest checking account tier.
Another consideration is how many money orders you will need, because each one is capped at a maximum value of $1,000. So if for instance you need to pay $2,500, you’ll need three money orders. Here again, knowing the fees in advance will be useful.
The maximum amount in which a single money order can be issued.
Be aware that buying a money order with a credit card is treated as a cash advance. So even if a money order seller offers purchase by credit card, we recommend paying with a debit card, cash, or a bank account withdrawal to avoid expensive finance charges on your next credit card statement.
Beware of Money Order Scams
One downside of money orders is that they are susceptible to fraud, and have become a common deception vehicle for thieves. To combat this, money order design has evolved to include a multitude of security and anti-counterfeiting features. From watermarks and security strips to rainbow ink patterns and UV-light features, look for the multiple indicators that can tell you whether a money order is legitimate or not.
If someone pays you with a money order for more than the requested amount and asks you to pay them back the difference, beware! This is a common scam of money order fraudsters.
If ever in doubt about a money order, note the issuer (the U.S. Postal Service, Western Union, and MoneyGram are the Big Three) and research the specific security features it should include. You can also call the issuer to help determine if the money order is authentic.
How to Cash a Money Order
If someone pays you with a money order, you have two options for converting it into usable funds. You can cash it in, literally receiving cash at a location that redeems money orders. Or you can deposit it in your bank account, like a check. They both involve caveats, though.
Converting it to cash offers the quickest access, and if the money order is later determined to be counterfeit or fraudulent, you may personally escape that problem.
However, redeeming money orders isn’t as convenient as buying them. For instance, some convenience stores sell money orders, but won’t cash them. And while post office locations will cash money orders in theory, if your money order is large and the post office is in a small market, they may not have enough cash on hand to redeem it.
Cashing it in could also involve a fee. Your best bet is to redeem a money order with the same provider that issued it. So take a postal service money order to a post office, a Walmart money order to Walmart, and so forth. This way you’ll likely avoid any redemption fees. Just as with buying money orders, though, it will pay to call ahead to a) verify that a location can honor your redemption, and b) ask if any fees will apply.
The alternative is to deposit the money order into your bank account, as you would a check. This offers the advantage of safely adding the payment to your bank balance, rather than walking away with a large sum of cash you may not physically want or need.
Be forewarned, though, that depending on your bank, depositing a money order may not be as easy as depositing a check. Although you may be used to making mobile deposits with your smartphone, some banks don’t allow electronic deposits of money orders, instead requiring you to come into a branch. And if your bank is an online-only institution, it may not accept money order deposits at all.
Whether you decide to turn your money order into cash or take it to your bank, be sure to bring a photo I.D. with you and don’t endorse the money order until you’re at the counter with a clerk or teller who will accept it.