A money order is a valid form of payment, but the average American is likely to be more accustomed to receiving cash, a check, or a peer-to-peer payment through a popular third-party app.
You may wonder what to do if you receive a money order. You can cash it at various locations, such as your bank or a post office. Typically, you’ll need a valid ID to do so, and, depending on where you cash it, you may have to pay a fee. Learn more about the process here.
What Is a Money Order?
A money order is a secure way to pay another person or a business that offers a guarantee beyond what a paper check offers.
While paper checks can bounce if there’s not enough money in the check writer’s bank account, a money order has already been paid for. The funds exist in a secure account, and thus they cannot bounce when the recipient goes to cash the money order.
Advantages of Using Money Orders
Money orders offer several advantages for both the payer and the recipient:
• No bank account needed: Those without bank accounts can’t send checks, and they may have difficulties using peer-to-peer payment apps, which typically require a checking account or debit card. This can make it challenging to send someone money without stuffing cash in an envelope, which is inherently risky.
An alternative? A money order. Because you can purchase and fund a money order with cash, you don’t need to open a checking account to complete the transaction.
• No risk of bouncing: Because money orders are prepaid, you don’t have to worry about it bouncing. This makes it a safer way of accepting payment, particularly from a stranger.
• No sensitive info: Checks contain personal information, including your name, address, phone number, and bank account and routing number. In the wrong hands, this can be risky and could leave you vulnerable to fraud. A money order shares much fewer details — typically, just the payer’s and recipient’s names.
Recommended: How to Transfer Money From One Bank to Another
Disadvantages of Using Money Orders
Money orders do have drawbacks to consider before purchasing:
• Fees: The person purchasing the money order will need to pay a small fee (usually less than $5) to issue the money payment form. The recipient may need to pay a cashing fee as well, depending on where they go to cash the money order.
• Limitations: Money orders are ideal for small transactions. Usually, they’re capped at $1,000. If you need to pay more, consider a cashier’s check.
• Scam and loss risks: There are some risks involved with money orders. For instance, it’s difficult to cancel a money order; if the recipient has already cashed it, you’re out of luck. If not, you’ll likely have to pay a fee to have the money order canceled. Another major risk? Money orders are at the heart of many common bank scams.
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Where to Purchase Money Orders
A huge benefit of money orders is how easily you can purchase them at common locations all around town. You can even purchase digital money orders without leaving the couch.
If you’re looking for a traditional paper money order, however, here are your main options:
Banks and Credit Unions
You can purchase a money order from most banks and credit unions. Often, you don’t even need to be a member of that financial institution, though you can inquire about discounts if purchasing from a bank or credit union where you’re already a customer.
Recommended: Can You Buy a Money Order With a Credit Card?
Post Office
The United States Postal Service (USPS) also sells both domestic and international money orders at many locations. You’ll want to visit its website to find a location near you that offers money orders; use the filter function to find offices that sell domestic and/or international money orders.
Grocery Stores and Retail Outlets
Many grocery stores, convenience stores, and other retail outlets (such as Walmart) also sell money orders, often through financial transfer services such as Western Union or MoneyGram. It’s a good idea to call a specific location in advance before driving there, just to be sure.
Step-by-Step Guide for Cashing a Money Order
Here’s how to cash a money order in four simple steps.
1. Verify the Money Order
Look over the money you received to ensure it appears valid. The USPS offers several tips to verify that your Postal Service money order isn’t a fake:
• Check the limit: Domestic money orders are capped at $1,000. A money order for more than that might not be legitimate.
• Look for security features: You should see a Benjamin Franklin watermark and a dark line (vertical) repeating USPS when holding the money order to the light.
• Check the dollar amount for discoloration: If the money order looks odd, specifically where the dollar amount appears, it’s possible the payer changed the dollar amount after purchasing.
• Make sure your name is correct: The name on the money order needs to match the name on your ID.
Other money order providers like banks and Western Union recommend such methods of verification as:
• Double-check any watermarks that should be present for authenticity. Western Union and other providers may have watermarks or holograms to ensure their validity.
• Verify the accuracy of the name and the dollar amount.
• For Western Union money orders, you can phone For Western Union money orders, you can call 800-999-9660 to verify the funds.
• For bank-issued money orders, you can visit a branch of the bank for authentication.
These steps can help ensure that your money order is legitimate and avoid issues down the line.
2. Endorse the Money Order
Assuming the money order is legitimate, take it to a bank or credit union, post office, qualifying retailer, or check-cashing location to cash it. You can cash it wherever it was issued (this should be evident on the money order), but you may be able to avoid fees by taking it to your own financial institution.
Once you’re there and at the counter, sign the money order to endorse it.
3. Present Valid Identification
Present your ID to the person behind the counter. They’ll compare your name to the name on the money order.
4. Pay Any Applicable Fees
Depending on where you are cashing the money order, you may have to pay a fee. Walmart, for instance, says it won’t charge more than $4 to cash a money order. However, fees can be particularly high at check-cashing services and retailers. To avoid these charges, you can take the money order to your own bank or credit union — or make sure the payer proactively sends extra funds with the money order to cover the cost of cashing it.
In addition to cashing a money order in this way, it’s worth noting that you can often cash a money by depositing it in an ATM. You can deposit an endorsed money order at an ATM at many bank once you’ve endorsed it, like a check.
Important Tips and Precautions
If you’ve received a money order, here are some tips to keep in mind:
Expiration Dates and Time Limits
While money orders don’t expire, it’s a good idea to cash or deposit yours as soon as possible. The longer you wait, the more you risk losing the money order or having it stolen. In addition, the value of the money order could decline due to fees being deducted if it sits for over one to three years.
Recommended: Tips for Tracking a Money Order
Fees and Charges
Where you choose to cash a money order can impact how much you pay in fees, if any. Your best bet for avoiding fees is taking it to your own bank or credit union. Go elsewhere, and the fees can cost a few dollars or more to cash a money order.
Handling Lost or Stolen Money Orders
If you’ve lost a money order you received or had it stolen, you’ll need to reach out to the money order’s issuer. That typically allows you to track the status of the money order or fill out a search request if the receipt is missing (which can involve a higher fee) if you don’t have the necessary details to quickly track it. Depending on what you learn, you might request a replacement and/or request a replacement if it’s been cashed fraudulently.
Avoiding Fraud and Scams
Fraudsters frequently use money orders to scam people out of money. If you’re selling goods online, don’t ship the items until you’ve received the money order and verified that it’s legitimate. Sometimes scammers will use the “overpayment” ruse in which they send you a money order for more than you were expecting and ask you to refund the difference. This should always be a red flag. The money order could prove to be fraudulent and, if you “paid back” the overpayment, you’ll be out some money.
The Takeaway
Cashing a money order is fairly easy, involving just a few steps, including bringing it to a cashing location with valid ID. Always thoroughly review the money order to ensure it is legitimate before endorsing it and attempting to cash it. Also, to avoid potential fees, try cashing it at your own bank or credit union.
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FAQ
What is the difference between a money order and a cashier’s check?
While both a money order and a cashier’s check offer secure ways of sending money to another person, there are several key differences between the two. Cashier’s checks are available in larger sums than money orders, which are typically capped at $1,000 each. However, you can purchase money orders at more locations (making them accessible to those who are unbanked) — and usually at a lower fee.
How long is a money order valid for?
Money orders do not expire. The funds that are attached to the money order remain in an account until they are claimed by the recipient. However, if a money order stays uncashed for more than one or three years, a service fee could be assessed and could eat away at its face value.
Can I cash a money order at any bank or credit union?
You may be able to cash a money order at any bank or credit union, but you could also be charged a fee to do so. You can typically avoid this kind of fee by taking it to your own bank or credit union or the issuing institution.
Photo credit: iStock/Sergey Dementyev
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