Money orders are a secure â€" and relatively cheap â€" way to transfer money instead of using cash, credit cards or checks. With a money order, you don't share routing and account numbers as you do with a personal check.
The maximum amount for a money order is $1,000, so this is not a great payment choice if you need to send a large amount, say for a down payment on a house or the house or for a car. This is usually done with a cashier's check when a personal check won't suffice.
You can purchase money orders in numerous places including:
- U.S. Postal Service offices
- Banks and credit unions
- Western Union or MoneyGram locations
- Many large retail and grocery chains such as CVS drugstore, Walmart, Publix, 7-11 and Kroger. Check with the service desk of your grocery store or pharmacy to see if they sell money orders.
When you purchase a money order, you'll need to fill it out to ensure the payment goes through.
While not complicated, you do need to know the types of information you need to fill out, as well as how to do so correctly.
How to Fill Out a Money Order
Here's what you need to do to fill out a money order correctly:
1. Gather the Required Information
Keep in mind that each place where you buy a money order may have different requirements as to what you need to successfully fill out and purchase a money order.
Although the form for money orders may also look different depending on where you go, you'll most likely need to the following:
- Your name and current mailing address
- Payment amount
- The payee â€" the person, business or organization you want to pay
- Payee's current mailing address
- Reason for payment â€" you may need to provide an account or billing number
Aside from that, you'll need to have an acceptable form of payment to purchase the money order. Some places, especially grocery stores and convenience stores, may impose amount limits and not allow you to use a credit card.
Once you've gathered the necessary information, the next steps are the order in which the money order form will most likely be, from top to bottom.
2. Write in the Payee's Name
There should be a section either called 'pay to the order of' or 'pay to' near the top of the money order. The payee can either be an individual or the name of a business (such as if you are to purchase a money order to pay a bill).
When writing the payee's name, make sure you spell it correctly and that your writing is legible. Don't forget to write it in ink so that nobody can tamper with it.
Plus, it's a really smart idea to fill in this section as soon as you can after purchasing your money order. That's because the payee is the only one authorized to to cash or deposit the money order. Sadly, if you lose the money order before you've had a chance to write the payee's name, anyone who has it can now put their name and cash it.
3. Fill in Your Name
There will be a section that says 'purchaser' or 'from' on the money order, usually underneath the payee. Yes, you write your name in this section.
4. Write in Your Address
There may be a section where the money order gives you an address field to write your (the purchaser's) address. In some cases, there may even be a section where you can add the payee's address. If there's both, check to see you're writing the correct address in the correct spots.
5. Write Important Details in the Memo Line
Most money orders will have a 'memo' field where you can write additional information that could be relevant. In many cases, people write the purpose for the money order, such as a bill payment or as a gift to a relative.
If the money order is for a bill payment, adding the account number in this section could be helpful. Some money orders have a section that's called 'account number' or 'payment for' that you could write these details in.
6. Sign Your Name
Close to the bottom of the money order is where you'll need to sign it. There should be a section that's labeled specifically for your signature, whether it's 'from', 'purchaser,' 'drawer,' or 'signer.'
This section should be on the front of the money order â€" the back is usually where the payee signs before cashing it.
After Filling Out the Money Order
Once you've filled out the money order, look over it carefully to make sure that everything you've filled out is correct. You've signed on the signature line, you've made it out to the right person and you have the recipient's address correct. Check, check and check.
If there is a mistake, first show it to a person where you purchase the money order instead of correcting it yourself. Employees at grocery stores, retail locations and big box stores along with banks and credit unions, will know how to make the corrections. You want the help because different money order companies will have different policies. In some cases, you can correct it yourself, the company corrects it for you, or they'll cancel it and create a new one altogether.
Before sending your money order off, you'll need to pay for it. In most cases, you can only use cash or a debit card to pay for them â€"in some rare cases, money order companies may let you pay with a credit card.
Before providing payment, check to make sure to see what the service fee is â€" some places may charge a different fee based on the form of payment you provide.
The money order issuer should give you a receipt â€" hold onto it. This piece of paper should have a tracking number and other important information to let you know where the money order is and if it's been cashed.
Plus, if your money order is lost or stolen, you can use this receipt and tracking number to cancel or get a replacement money order. However, that's assuming that the money order hasn't already been cashed by someone else.
Avoid These Mistakes on Money Orders
Yes, it's straightforward to fill out a money order, but making a mistake â€" even a minor one â€" can end up having severe consequences. That's why it's important to check before sending off your money order or even before you finalize your purchase.
Here are some common mistakes people make when filling out a money order:
- Writing the payer in the payee field
- Spelling the payee's name wrong
- Writing the payee's name incorrectly
- Misspelling your name or leaving it blank
- Throwing away or losing your receipt
- Not signing the money order
- Not reading through the terms and conditions of the money order before making the purchase
For the last point above, it's important to know what your rights are in case your money order is lost or stolen. If you want to make sure you can cancel or replace the money order, reading through the terms and conditions will show you what you need to do in case that ever happens (though we sincerely hope you won't have to).
Alternatives to Money Orders
Paying with a money order can be a safe and effective form of payment for amounts $1,000 or less,, but it's not the only one. Sure, you can pay in cash and could make sense if you're paying someone you trust in person. However, you won't be able to track the payment like how you could with a money order.
Instead, you can consider the following money order alternatives:
- Personal check: Writing a personal check from your bank account allows you to track your payment and has many of the same types of information you'll need to fill out for money order purchases.
- ACH transfer: Most commonly called an online bank transfer, you can make electronic transfers from one financial institution to another and typically takes a few days to process.
- Wire transfer: A wire transfer may take longer (many banks charge a fee), but it's useful if you're sending money to another country or in larger amounts. Depending on the nature of the transaction, some businesses will only receive payments this way.
- Certified check: This type of check is used in place of a personal check and guarantees funds because it's drawn directly from your bank account when you purchase one. Personal checks don't have this guarantee and are subject to the bank's overdraft penalties should you not be able to cover the amount.
- Cashier's check: This type of check is similar to a certified check except the funds are drawn from the bank's account, though the funds are still coming from yours.
- Prepaid debit card: Though you'll need to be careful to prevent the card from being lost or stolen, you can preload it with the exact amount you want to pay someone or to pay bills. You can use cash or money from your bank account via debit card to buy a prepaid card at many stores.
- Person-to-person apps: Using apps like Paypal or Venmo offers a fast and convenient way to send money that also allows you to track payment.
Each of these options have their own pros and cons, so it's crucial to see what those are before making your decision. The main differences between these forms of payment have to do with the cost and speed of payment.
Frequently Asked Questions (FAQs) About Money Orders
We've answered some of the most common questions about money orders.
To fill out a money order correctly, you'll need the following information:
- The payee's name
- The payee's address
- The payment amount
- Your (the payer's) name
- Your address (if applicable)
- Reason for payment
The money order issuer should have these areas clearly labeled so you know where to fill it out.
Yes, all money orders need to have the purchaser's signature in order for them to be a legitimate form of payment. Think of it as giving the payee the authorization to cash the check, much like what you would do on a personal check.
Typically, the only person whose address is on the money order is the person (or business) to whom the money order is going â€" the payee. In some cases, you may need to put your address, though that's rare.
Some other options you can use to send cash other than money orders include:
- Personal check
- ACH (or electronic) transfer
- Wire transfer
- Certified check
- Cashier's check
- Prepaid debit card
- Person-to-person money transfer apps like Paypal or Venmo.
You can purchase money orders at banks, the US Postal Office, or money order issuers such as Western Union, MoneyGram, or major retailers like Walmart. They can be purchased at many grocery stores and chain pharmacies.
Contributor Sarah Li-Cain is a personal finance writer based in Jacksonville, Florida, specializing in real estate, insurance, banking, loans and credit. She is the host of the Buzzsprout and Beyond the Dollar podcasts.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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