What is a money order and how does it work?

Money orders may seem outdated in a world of apps, online banking and instant cash transfers. But there are still times when a money order might be necessary. 

So what is a money order? It’s a secure form of payment that looks and functions a lot like a traditional check. But a money order is prepaid and isn’t tied to someone’s bank account, which also means it can’t bounce. 

Learn more about what money orders are and how they work.

Key takeaways 

• Money orders are sometimes used as alternatives to checks and cash.
• Because money orders are prepaid, they’re a guaranteed form of payment.
• Money orders may be available at banks, convenience stores, post offices and other places.
• The fee to purchase a domestic money order might range from around $1 to $5, but international money orders might cost more.

A money order is an alternative to checks, cash and digital payments. Unlike a check, a money order is guaranteed, which means it can’t bounce. 

Money orders don’t require a bank account to send money, making them a more accessible option to some. And they can be more secure because you don’t have to share account information when sending them. 

But money orders are prepaid. So if you’re going to purchase a money order, you do have to have enough to immediately cover the amount plus any fees.

If you decide to use a money order, you’ll need to go somewhere where you can purchase one. Then you fill it out with the recipient’s name and the amount to be paid. Next, you prepay the full amount for the value of the money order, plus a small fee that goes to the establishment that sold it to you. 

The recipient can then cash or deposit the money order much like they would a check. But some restrictions may apply. And in some cases, there might be a fee for cashing the money order.

You may be able to buy money orders at:

• U.S. Postal Service post offices
• Banks
• Convenience stores
• Credit unions
• Money transfer services
• Pharmacies
• Retailers or big-box stores
• Grocery stores

Money order prices differ depending on where you buy them. Fees for money orders are usually based on the money order’s dollar amount. 

For domestic money orders, the fees are typically between $1 and $5. International money orders may cost more. For example, the Postal Service charges $49.65, plus a processing fee that varies by country.

You can typically pay for money orders using cash or a debit card. Because issuers often want the cash up front, they may not accept a personal check or credit card. 

Even if a credit card is accepted, your card issuer could consider it a type of cash advance. And if it does, you generally will pay a fee for it and may be charged interest from the transaction date. Plus, if the added balance of a cash advance sits unpaid for a while, it could also hurt your credit score. Check your credit card agreement to see what types of transactions might be considered cash advances.

Money orders may look different depending on where they’re purchased. But generally, filling one out is similar to filling out a check. 

Each one comes dated and with the amount printed on it. Then, you fill out the payee’s name, your name, your address and your signature. You can also write notes to yourself in the memo section about what the payment is for or anything else.

Money orders usually come with receipts that include the serial number so you can track and confirm the payment’s delivery.

Depending on where you purchase your money order, you may be limited to a maximum dollar amount of $500 or $1,000. 

For example, the Postal Service sets a $1,000 limit on domestic money orders and a $700 limit on international money orders. Purchasing multiple money orders to cover larger amounts might be a way to get around the issue. A cashier’s check, which doesn’t typically have a limit, could be another way.

If someone has decided to send you a money order, you might be wondering how it works and how to access the money.

If you convert the money order to cash, you may be able to avoid fees by taking it to the provider that issued it. For example, the Postal Service says you can cash its money orders for free by visiting a post office. If you go to a check-cashing store to cash a money order, there may be a fee. 

Depending on the bank, you might also be able to deposit your money order. But you may have to visit a physical location to do it.

Money orders generally don’t expire. But there might be a charge to cash one if you wait more than a year after it was issued. The back of your money order should have more information. 

If you lose your money order, the funds aren’t necessarily gone. But your next steps may vary.

Contact the issuer as soon as possible. Some issuers may be able to stop the payment. Others might investigate and replace the money order if it’s confirmed lost or stolen. But a replacement may come with a processing fee. 

If you think the money order was stolen, you could also consider filing a police report.

With so many payment options available today—from checks to online apps and cash—you may be wondering when a money order is worth considering. 

Money orders can work as an alternative to cash and checks because they don’t require either party to have a bank account. Here are some circumstances when a money order may be helpful:

Because you pay for a money order with cash, it can be a good alternative payment method if you don’t have a bank account or access to paper checks. Another benefit to using a money order is that it’s paid up front, so it can’t bounce like a check can. 

But remember that there are typically fees associated with money orders.

Unlike a check, a money order doesn’t contain sensitive information like account or routing numbers. And unlike cash, a money order can only be used by the recipient. So you might feel more comfortable with a money order if you need to send money by mail. 

Plus, if you keep the money order receipt, you can use it to track your payment.

Paying with a money order can save you the trouble of waiting for a check to clear and post to your bank account.

If you’re depositing a money order for cash, you might be able to receive that cash immediately. If you’re depositing the money into a bank account, you might have to wait a few days for the funds to become available.

Like any form of payment, money orders can be subject to scams. The Postal Service—among other issuers—designs money orders to prevent fraud, so they are marked with distinct designs that can be seen when held up to the light. 

You can also consider the amount of the money order. Typically, the Postal Service’s limit is $1,000, so if it’s in an amount larger than that, it may be fraudulent. Check for a discolored dollar amount too. That could be a sign that it’s been erased, which can indicate fraud.

If you think you’ve received a fake money order through the post office, you can verify your money order by calling 866-459-7822. You can also report potential scams to the U.S. Postal Inspection Service.

Money orders can be useful, but they may not be right for every situation. If that’s the case, there may be alternatives.

Cashier’s checks are another way to make payments with guaranteed funds. With a cashier’s check, money is taken directly from your bank account. This usually means if you order a cashier’s check, you need an account with the issuer and enough money to complete the transaction.

A cashier’s check is a popular alternative for larger payments where personal checks and cash may not be an option. They are issued and signed by a financial institution representative. So not only are cashier’s checks guaranteed, but they’re also widely accepted and safe.

A wire transfer is an electronic transfer of funds from one bank, credit union or financial services company directly to another. It allows people in different locations to exchange money without cash or a check. You have to pay for the transfer up front and provide information to the institution, like the recipient’s name and bank details.

Generally, domestic wire transfers take one to three business days, while international wire transfers can take two to five business days. They may come with a fee, depending on the bank.

Like a wire transfer, an ACH transfer is a type of electronic payment. It’s used for things like direct deposits, online bill pay and more.

ACH transfers are processed through the National Automated Clearing House Association and are regulated by the federal government. 

Digital payment services, such as Zelle®, Cash App and PayPal, may offer the ability to make payments or transfer money.

Still have more questions about money orders? These answers to frequently asked questions might help. 

Money orders may not be the most popular option for sending or receiving money, but they are widely accepted. And because they’re guaranteed, money orders can be a good option when sending money through the mail. 

Another option to consider for sending and receiving money is using Zelle® through the Capital One Mobile app.