What Is a Money Order?

Written By Cathy Lovering
Last updated February 27, 2021

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Personal Finance
February 27, 2021

Simple. Thrifty. Living.

A money order is a guaranteed form of payment. It looks like a check, but it is prepaid by the sender. So a legitimate money order will not bounce. Money orders provide several benefits such as security, privacy, and ease of use. There are some things to watch out for, like extra fees and possible scams.

Money orders are one way to make a payment without using cash. A money order is as good as cash, but it is made out to a specific person or entity so it’s harder to steal. People who don’t like checks or don’t have a bank account turn to money orders for a variety of financial transactions. Here are some other pros of money orders:


Unlike a check, a money order cannot bounce. Some money orders, like those you get at the post office, never expire. The recipient knows a money order is worth the amount on the document, even if it has been in transit for several days. If you lose a money order after you buy it, you can cancel it and get the money back.


A money order doesn’t have any bank account information, your home address, or other sensitive data you want to keep private. That makes it different from a check. A thief cannot copy your bank account information and create false checks in your name. Money orders, therefore, reduce the risk of fraud and identity theft.

Easy to Get

It is easy to get a money order. They are available at the post office, banks and credit unions, some drugstores and big box stores and convenience stores. The process is simple. You just show up to the location, fill out a form and pay for the money order and an issuing fee.

Easy to Cash

If you receive a money order, you can deposit it into your bank account like a check. You can also cash it like a check by signing the back. You do not have to go to your own bank to cash a money order. A check cashing business may also help you, for a fee.


A money order is made out to a person, business or institution. If it is lost and someone finds it, they cannot steal it like they would cash. Trying to cash a money order that isn’t meant for you is the same as forging a check. So, you can send a money order through the mail or use it to pay a bill without worrying that the full amount won’t be applied to your account. Follow our tips for filling out a money order correctly in order to make it as secure as possible.

Just as there are benefits to money orders, there are reasons to be cautious. Keep these in mind before buying a money order or asking someone to give you one instead of cash.

Hard to Trace

It is possible to cancel a money order, meaning there is a safety net in case you lose the money order before you give it to the recipient. But it is harder to know when or if the recipient cashes the order. You may want to know this in case the recipient says they were never paid. You can get information on what happens to the order, but it may take time and extra paperwork.

Takes More Time

It is quicker to write out a check or hand someone cash than to buy a money order. It takes time to find a place to buy the order, wait in line, fill out a form at the counter, pay the fee and then give the money order to the recipient. For many people, this is a minor concern, as they are many places to buy money orders.

Fees Can Add Up

There is a fee to buy a money order. There may also be a fee to cash a money order depending on your bank. The USPS charges a set fee according to the value of the money order. These fees can add up over time, especially if you write a money order for each bill you pay.

Dollar Limit

Money orders have a maximum value, usually $1,000. This can make it tough to use them to pay a large bill or to make a big purchase. If you want to buy your neighbor’s old recreational equipment and you’ve agreed on $1,200, you have to use at least two money orders. This means it’s two money orders to track and trace and twice the amount of fees.

There are ways to protect yourself so you get the most out of using a money order. Here are some general tips on how to save money and avoid fraud.

Know the Fees in Advance

Compare money order retailers to find the best price, especially if you are making several payments. The fee for each money order should appear on the retailer’s website or on signage at the in-person kiosk. If you are asking someone to pay you by money order, know how much it will cost you to cash. If you plan to deposit the money order, ask your bank if the funds are available to you right away or if there is a holding period.

Include Your Account Number If You’re Paying a Bill

In the memo portion of the money order, include all information that is necessary to apply your payment to the right account. If you are paying a phone bill or power bill, include your account number and even your address. There can be several people with your name. If you are not paying in person, you have to trust that when the company receives the money order they will credit the right customer.

Get a Receipt

You should get and keep at least three receipts and documents:

  • The receipt from when you bought the money order
  • Your copy of the money order
  • A receipt from the person you are paying

The first two documents provide a way to track and trace the money order. The last is confirmation you have made the payment. That way, you have proof you gave the money, even if the recipient doesn’t cash the money order right away.

Watch Out for Scams

Money orders are sometimes used by scammers to defraud people out of their money. To protect yourself, try to do the following:

  • Verify the money order is legitimate before cashing. Call the issuing organization.
  • Check the amount of the money order to make sure it is the right dollar figure.
  • Look at the paper for security features like a watermark.
  • Never give someone back more money than they give you in a money order.

Money orders are a great financial tool for people who want an alternative to cash or checks. Keep these tips in mind before your next purchase or payment.

About the Author

Cathy Lovering

Catherine Lovering has written about personal finance and health for over 10 years, with bylines on IvyExec.com and Healthline.com. She holds an LL.B. (J.D.) from the University of Victoria.

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