A money order is an alternative to a personal check, offering a safer way of payment. The cash is not pulled through when a money order is placed by the receiver (unlike a personal check). When you acquire a money order, cash is taken from your account, ensuring that the money will be available regardless of your available balance.
If you don't have an account or are concerned about blowing your check, money orders are a suitable option. Although filling out a money order isn't difficult, it does need precision since you can't change a completed money order.
Step-by-Step Instructions on How to Fill Out a Money Order
To begin, you'll need to figure out where to get a money order. Money orders are available at banks, retail outlets, and post offices.
When purchasing a money order, you must pay in advance, which can be done with cash, a debit card, or a bank account. In some situations, you might be able to buy one using a credit card, but this isn't encouraged because your credit card company may categorize it as a relatively pricey cash advance. Depending on where you get one, you may be charged a fee ranging from $1 to more than $5. The steps to purchasing a money order are as follows:
- Make a note of the beneficiary's name to which you're making a payment, as it most likely will be verified when trying to cash the check. Ensure you use the proper name and write it down correctly.
- Write down your accurate address in the purchaser box.
- In the note line, provide a detailed description of a transaction, such as what the cash is for. Of course, this is an optional step, but explicitness may help you manage your budget.
- Finally, put your signature on a money check to make it legally enforceable.
- You are highly recommended to keep the receipts until you get confirmation on whether the money order has been deposited or cashed. This is an important step to consider as you may cancel or reclaim the order if something goes wrong. If the recipient claims that they never received the money order, the receipt serves as confirmation that it was delivered.
If you're worried about doing any of these processes incorrectly, get help from the person who is arranging your money order.
How to Cash a Money Order?
You may cash money orders in most traditional banks and local credit unions; however, some charges may apply if you are not a member. Money orders are also available to cash at the issuers, such as a Western Union.
Money orders are legitimate only with a person's name on them, thus having a valid identification (passport, ID card, military identification, or driver's license) on you when cashing it. If the name on an identification document and money order doesn't match, you have to cancel it and reorder.
Advantages and Drawbacks of Money Orders
Although a money order is a simple option of several payment methods, there are certain advantages to utilizing one over others, including:
- It's safe and secure to mail them.
- They won't bounce like a personal check if they're legit.
- To purchase one, you do not need a bank account.
- You have the option of sending them both domestically and abroad.
- The funds will be available right away.
However, a few potential concerns may lead you to choose a different payment method. The following are some disadvantages:
- The maximum amount you may make is usually $1,000.
- Most of the time, you'll have to buy one in person.
- They are readily tampered with or manipulated.
- The cost varies depending on where you purchase one.
A cashier's check is a common alternative to a money order. These can only be obtained through your bank or credit union just requiring you to open an account, but they allow for bigger sums of transactions. You'll almost always have to pay a charge for this payment method. Setting up a wire transfer is another alternative. This is very useful when moving money overseas, and it may be required in some financial activities, like closing on a house.
How to Avoid Money Order Scams?
Like other types of financial contributions, money orders are susceptible to fraud. Frauds involving money orders occur in a variety of shapes and sizes. For example, someone may send you a fake money order as payment. That's why you need to get the money order deposited and only after sending the item.
Alternatively, the hacker may send you a bogus money order and request to pay for an item, then require you to return a part or all sum because they're in financial trouble. On the other hand, you could wish to purchase something from an internet retailer that only accepts money orders. You may send the money order but don't have the merchandise in this scenario. The money is far gone by the time you understand what's occurred. You may cancel a money order and receive a refund in certain cases, but don't count on it, especially if the money order has already been cashed.
Make sure you're sending money to a reliable vendor of products and services before you provide a money order. If a company only accepts money orders, it's a solid sign that you should do some further research before purchasing.
If you are waiting to get a money order, phone the issuer to make sure it's still valid before cashing or depositing it. Don't waste the cash straight immediately if you deposit a money order you're not convinced is genuine. A bank may need some time to ascertain whether the money order is false. Plus, you may get charged fees if the amount hasn't been placed back into the bank account.
Last, it may be a scam if someone gives you a money order and then requests to pay it back. Don't pay any money to them; contact your bank to rectify the problem.
The Final Word
In most situations, you may pay via debit/credit cards or cash, which is generally a safe payment method. Mostly, credit card issuers provide zero-liability fraud protection if victimized. When it comes to money orders, it's crucial to know how to utilize them. It's ideal if you know the receiver, whether it's a person or a corporation. Make sure you trust the beneficiary, just like you'd with any other payment method. If you're still unsure, do some more research, or don't make the payment at all.