What Is a Money Order and How Does It Work?


Money orders may seem outdated in a world of apps, online banking and the ability to send money in an instant. But there are still times when a money order might be necessary.

So what is a money order? It looks and functions like a traditional check in some ways. But there are key differences.

Key Takeaways 

  • Money orders are an alternative to writing a check or paying in cash.
  • Because money orders are prepaid, they’re guaranteed.
  • Money orders are widely available at locations like banks, convenience stores and post offices.
  • Money orders typically include a fee ranging from $1 to $5.

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How Do Money Orders Work?

When you buy a money order, you’ll fill it out with the recipient’s name and the amount to be paid. You will then prepay the full amount, plus a small fee. The recipient can then cash the money order just like they would a check. Depending on where the recipient cashes it, there might be a fee.

Some domestic money orders, including those issued by the U.S. Postal Service, can have a $1,000 limit. And they have a limit of $700 for international money orders.

Bear in mind that if you use a credit card to buy a money order, 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. Check your credit card agreement to see what types of transactions might be considered a cash advance.

When You Can Consider Using a Money Order

With so many payment options available today—from checks to online apps and cash—you may be wondering when it’s worth considering a money order. Here are some ideas:

If You Don’t Have a Bank Account

Because you pay for a money order with cash, it can be a good alternative payment method if you don’t have access to paper checks. But remember, there are typically fees.

If You’re Sending Payments Through the Mail

A money order doesn’t contain your account information and can only be cashed by the recipient. So you might feel more comfortable if you need to send money by mail. Plus, if you keep the receipt, you can use it to track the money order.

If You Don’t Want to Wait

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

Where to Get a Money Order

You can buy money orders at locations including:

  • Banks
  • Convenience stores
  • Credit unions
  • Post office
  • Drugstores
  • Grocery stores
  • Big box stores

How Much Is a Money Order?

Money order prices may differ depending on which store or financial institution you buy them from.  Fees for money orders are typically between $1 and $5. They can be based on the money order dollar amount.

Money Order Limit

Depending on where you purchase your money order, you may be limited to an order of $500 or $1,000. You can purchase multiple money orders to cover larger amounts.

How to Fill Out a Money Order

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. You’ll fill out the name of the payee, your name, your address and signature. You can write notes to yourself in the memo section about what the payment is for or anything else.

When buying a money order, it’s a good idea to keep the receipt. It includes the serial number, so you can track it and confirm payment.

Money Order vs. Cashier’s Check

Another way to pay using guaranteed funds is with a cashier’s check. With a cashier’s check, money is taken directly from your checking account, which usually means you need an account with the issuer and enough money to complete the transaction.

Typically, 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 cashier’s checks are guaranteed, widely accepted and safe.

Avoiding a Money Order Scam

Like any form of payment, money orders can be subject to scams. 

The USPS—among others—designs money orders to prevent fraud, so they are marked with distinct designs that can be seen when held up to the light. Here’s what the USPS security measures include:

  • Watermarks of Ben Franklin on the left side
  • A multicolored marking of the USPS letters to the right side of the Ben Franklin watermark
  • The dollar amount printed twice

You can also consider the amount of the money order. Typically the 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 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.

Cashing a Money Order

If you receive a money order, your bank should be able to help you cash or deposit it. 

If that’s not an option, you may also be able to cash it with the company that sent it. For example, the USPS says you can cash its money orders for free by visiting a post office.

If you use a check-cashing service, there may be a fee.

Money Orders in a Nutshell

Money orders may not be the most popular option to pay or receive money, but they are widely accepted. Because they’re guaranteed, money orders may be a good idea when buying from people you don’t know or sending money through the mail. 

If you’re interested in learning more about secure payment options and other ways to protect your accounts, you can check out more privacy and security articles from Capital One.


We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.

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