Understanding Money Orders and Their Purpose
A money order is a paper document that works like a check but functions differently. When you purchase a money order, you pay a specific amount of money plus a small fee to a money order issuer. The issuer then guarantees payment of that amount to whoever you name as the recipient. This makes money orders different from cash, which anyone can spend if they find it, or personal checks, which may bounce if there isn't enough money in the account.
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Money orders have existed since the 1800s and remain widely used today. According to the Federal Reserve, millions of money orders are sent through the mail and in person each year in the United States. People use money orders for various reasons: paying rent when a landlord won't take checks, sending money to someone without a bank account, paying bills by mail, or making purchases from businesses that don't take personal checks or digital payments.
The money order serves as proof of payment because it includes a receipt and a tracking number. This receipt is important—you keep it until you confirm the recipient has received and cashed the money order. If the money order is lost or stolen in the mail, the receipt allows you to file a claim and receive a replacement or refund.
Money orders can be purchased in amounts ranging from $1 up to $1,000, though some issuers allow multiple money orders if you need to send more than $1,000. The cost of a money order typically ranges from $0.65 to $2.00 depending on the amount and where you purchase it. This makes money orders relatively affordable compared to wire transfers, which can cost $15 to $50 or more.
Practical Takeaway: Money orders are a straightforward way to send money that creates a paper trail and offers protection if the document is lost or stolen. Understanding what a money order is and how it works helps you decide if it's the right payment method for your situation.
Where to Purchase Money Orders
Money orders can be purchased from many locations throughout most communities. The most common places include post offices, banks, credit unions, supermarkets, convenience stores, and drugstores. Each location has different hours and fees, so comparing your options before purchasing can save you money and time.
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The United States Postal Service (USPS) offers domestic and international money orders at all post offices nationwide. USPS money orders cost between $1.45 and $2.00 depending on the amount. Post offices are open during regular business hours, though some locations may have extended evening or weekend hours. One advantage of purchasing through USPS is that postal workers can provide guidance if you have questions about filling out the money order.
Banks and credit unions typically sell money orders to their customers. Many financial institutions charge $1.00 to $1.50 per money order for members. If you already have a bank account, purchasing through your bank can be convenient since you can combine this with other banking tasks. However, some banks limit the number of money orders you can purchase at one time or may require you to make the purchase during specific hours.
Supermarkets, convenience stores, and drugstores like Walmart, Target, CVS, and Walgreens sell money orders at customer service desks. These locations often charge $0.65 to $1.25 per money order, which is sometimes cheaper than post offices. The main advantage is extended hours—many of these retailers operate early morning through late evening, seven days a week. However, there may be daily limits on how many money orders one person can purchase.
Western Union and MoneyGram are companies that specialize in money transfer services and also sell money orders through thousands of locations including supermarkets, pharmacies, and dedicated agent locations. Their fees typically range from $1.00 to $2.00. These services often have the most locations available and may offer longer operating hours than banks or post offices.
Practical Takeaway: Research the locations near you that sell money orders, compare their fees and hours, and choose the option that fits your schedule and budget. Purchasing from a convenience store or supermarket often costs less and operates at times that may work better with your schedule than a post office or bank.
How to Fill Out a Money Order Correctly
Filling out a money order correctly is crucial because mistakes can delay payment or cause the money order to be rejected. The process involves completing several labeled fields, each serving a specific purpose. While the exact layout varies slightly between issuers, most money orders have the same basic sections that must be filled in.
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The "Pay to the Order Of" field (sometimes labeled "Payee") is where you write the name of the person or business receiving the money. Write the name clearly and legibly in cursive or print. Use the complete legal name rather than nicknames or abbreviations when possible. For example, write "Maria Rodriguez" instead of "Maria" or "M. Rodriguez." If sending to a business, write the business name exactly as it appears on official documents. This field is essential because the money order can only be cashed by the person or business named in this space.
The "From" or "Purchaser" field contains your name as the person sending the money order. Write your full name in this section. While the recipient cannot cash a money order made out to someone else, money order issuers want to know who purchased it for their records. If there's a problem with the money order, they use this information to investigate.
The "Memo" or "Account Number" field is optional but useful. This space allows you to write a note about the purpose of the payment. For example, if paying rent, you might write "Apartment 3B Rent - January" or if paying a utility bill, write "Account #12345." This notation helps the recipient know what the payment covers and serves as a reference for you when you review your records later.
The amount field requires you to write out the dollar amount both in numbers and in words. Write the numerical amount (like "$250.00") in the box marked for numbers. Then write the amount in words in the line that says "Dollars" (such as "Two hundred fifty and 00/100"). This dual-entry system prevents fraud and confusion. Be precise with your amounts—don't leave blank spaces or allow room for additional digits to be added.
Never sign a blank money order or one where fields are incomplete. Only sign the money order after all other information is filled in. Some money orders have a signature line; others do not. Follow the instructions printed on your specific money order. Sign in the space provided with the same signature you use for checks and official documents.
Practical Takeaway: Before you purchase a money order, know the exact amount you need and the recipient's complete name. Fill out all fields clearly and completely, double-check your work for errors, and keep your receipt. Never leave any fields blank or sign before completing all sections.
Sending Money Orders Through the Mail
Once your money order is completed, you need to decide how to deliver it to the recipient. While you can hand-deliver a money order in person, many people mail them because the recipient may live far away. Mailing a money order requires specific precautions to reduce the risk of loss or theft during transit.
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Never send a money order as a regular letter in a standard envelope placed in your home mailbox for postal carrier pickup. Money orders are valuable documents, and standard mail offers no protection if the envelope is lost, damaged, or stolen. Instead, mail money orders using tracked or registered delivery methods that provide proof of delivery and allow you to follow the money order's journey through the mail system.
Certified mail with return receipt is one option. You take the money order to a post office and request certified mail service. The postal service scans the item, assigns it a tracking number, and provides a receipt showing the date and time of mailing. The recipient must sign for the delivery, and you receive confirmation showing the delivery date and recipient's signature. Certified mail typically costs $3.75 to $4.00 in addition to regular postage (currently $0.68 for a standard letter). This method provides strong documentation that the money order was received.
USPS Priority Mail Express is faster than certified mail, with delivery typically occurring within one to two business days. This service includes tracking and signature confirmation at delivery. Priority Mail Express costs approximately $30 to $50 depending on distance and weight, making it more expensive but faster than certified mail. This option works well when you need the money order to arrive quickly or when sending a large amount of money.
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