Money transfers are paper documents used for making payments to a specific party, but they have a few more stipulations than ordinary checks.
April 10, 2020 — 4 min read
If you need to make a money transfer or payment, you will inevitably encounter quite a few options. It can be difficult to figure out which is the best option for you. Is there really a big difference between a money transfer and a wire transfer? What about cashier’s checks and money orders? Though the terminology can get confusing, these transfers all have their own benefits, depending on your circumstances.
If you’ve been looking into ways to securely send money, you may have run across the term “money order”. Interested in learning more? Let’s take a look at what they are, when you might need one, and how to get one.
Have you used a check before? Then you won’t have much trouble understanding money orders. Money transfers are also paper documents used for making payments to a specific party. However, they have a few more stipulations than ordinary checks.
The main difference between traditional checks and money orders is that when you specify who will receive the money order and how much they will receive, both you and the recipient must sign for the order.
Additionally, unlike traditional checks, money orders are prepaid. So unlike checks, there’s no chance that a money order could bounce, provided that you provide the required amount upfront.
One final feature to note is that unlike cashier's checks and other similar products, money orders typically have a maximum purchase amount. This amount may vary depending on the provider, but it is generally around $1000 USD.
Money orders are a popular method for international and domestic payment. These are some of the reasons why you might want to use them:
Security. Since your recipient has to sign for the order, there’s a significantly lower chance of the order getting intercepted. And in the event that it is, a money order (unlike a personal check) won’t have any of your personal or banking information attached to it, so you won’t need to worry about strangers accessing that.
Peace of mind. Since you pay upfront, you know that your money (and all of it) is going to reach the recipient. As long as you have the money, you can send the money order.
**No bank account needed. **Many transfer methods require you to have a bank account. If you don’t have one (though we recommend that you do), you can get—and pay for—a money order with cash.
For these reasons, some sellers will require that you make payments with money orders. But how do you go about doing that?
Though some institutions have moved to providing online money orders, in most cases you will need to obtain one in person. You can get one at your bank as well as credit unions, supermarkets, check cashing stores, and even post offices. Once you know where to go, here's what you need to do:
Know how much you want to order, and have the funds. If you’re getting a money order at your bank, you can withdraw from your account. If you’re getting it at a retailer, you can make a debit card transaction or pay with cash. Remember: you need to pay upfront. You can’t write a personal check or use a credit card. You also will need to pay a small fee for the service. The price will vary depending on where you get the order; banks and credit unions will be a little more expensive than retailers.
Know the recipient. You will need to provide the name of the individual or business who will be receiving the money order. If you’ve written a personal check before, you should have no problem filling out the form.
**Keep a record. **Until you know the recipient has the money order, make sure to hang on to your records and receipts. If you receive a money order, you can cash or deposit it like any other check.
As we mentioned above, money orders typically have a limit of $1000 USD. For some payments, that can be more than enough. But if you’re making a down payment, tuition payment, rent payment, mortgage payment, or any other form of payment that could be a little pricier, a money order might not be the best option for you.
Sure, you could just get multiple money orders that add up to your total amount. But not only is that inconvenient, it can also get costly. Money orders do come with a small fee, and multiple money orders means multiple fees.
Need to make a larger transfer? Consider making an online money transfer instead. No hidden fees and no need to leave the house.
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