Are you in a situation where you need to make a payment but you can’t pay with cash? A check is usually the way to go! But what if the payee wants to make sure the check will not bounce and ensure that the funds are available?
Depending on the amount of money needed, a money order might be the better route to take. A money order gives the payee peace of mind in knowing that the funds are actually there. But how does a money order work? Let’s find out!
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How does a money order work?
Money orders are very similar to checks. You’ll purchase a money order for a set amount with cash or cash-like payments, like a debit card. The payee, or the person receiving the money order, then knows that the required amount of money has been cleared. They can either cash the money order or deposit it into their bank account, just like a check.
What is the purpose of a money order?
So, why would you use a money order instead of a check? Well, it is a great form of payment if you need to send money securely because it can only be purchased with certified funds, meaning the funds have to actually be in your account.
It’s safer than sending cash as well because you can report a money order as being lost or stolen. Money orders are also a great option for you if you don’t have a debit card.
How much does it cost to cash a money order?
Money orders can be cashed for a small fee, and that fee will vary depending on where it is cashed. For example, MoneyLion can charge up to $8 to cash a money order. The fee is taken directly from the money order amount.
Can I deposit a money order via mobile banking?
Most banks allow you to deposit a money order via mobile banking. For example, the Ingo app allows you to deposit a money order directly into your RoarMoney account.
When using Ingo, your funds can be available within minutes or up to ten days later, depending on the destination of the funds. This means you can have access to your money quickly as well as being confident that the funds will clear immediately.
Your financial institution might have similar rules when it comes to depositing money orders or the availability of funds. Most banks require a 24-hour waiting period before funds are cleared through mobile banking, though it always depends on the amount.
Be sure to check with your bank before depositing the money order if you need the funds immediately!
Can a money order be cashed immediately?
Yes, you can cash a money order immediately. Most places treat a money order like a check or cash, meaning you can receive your funds quickly with a small fee included. The fee is taken directly from the total amount of the money order.
Is a money order safer than a check?
Money orders are as safe as checks. They allow you to send funds in the mail if you do not want to send cash. You can track a money order if you want to ensure that the payee receives it. This also makes it possible to potentially ask for a refund if the money order gets lost in transit.
Keep in mind that there could be a fee associated with a refund on the receiving end of a money order. Plus, there are scams surrounding money orders so it’s important to verify if a money order is legitimate before you accept one. There will be a number on the money order, allowing you to verify its legitimacy.
What happens if you fill out a money order incorrectly?
If you fill out a money order incorrectly, you will need to replace it. But not to worry! You can request a replacement from the same place you originally purchased the money order.
It is important that you do not try to change a money order because that can make it invalid. One of the best practices to implement is to complete the money order before you leave the bank or store just in case.
Things to consider with money orders
Money orders are a great alternative to checks, but there are some things to consider before you choose to pay via money order.
Cannot be purchased with a credit card
Remember that one of the great things about money orders is that you can trust that the funds are in the bank account of the person signing the money order. This means that it can only be purchased with cash or via a debit card.
Only have a credit card? Consider a cash advance if you’re in a pinch and only have credit cards. You can then use the funds from the cash advance to purchase the money order.
Money order limitations
Need a $5,000 money order? You might not be able to get it all at once. Money orders have a limit of $1,000 in most places, while some locations may have an even lower limit. You might be able to purchase multiple money orders in order to get the amount you need, but it is important to consider these limitations as there is still a fee per money order.
No expiration dates
Been hanging on to a money order for a few months? Not to worry. Money orders, as long as they are domestic, do not have an expiration date. Though you can hang on to them as long as you need, keep in mind that it’s best to cash it as soon as possible.
Attractive to scammers
Be aware of money order scams! USPS offers excellent advice when it comes to how you can spot a fraudulent money order. Pay attention to the paper that the money order is printed on before accepting it as a form of payment.
If someone gives you a money order for more than the requested amount and asks for the difference back, ask for a new money order with the correct amount. Despite the scams, money orders are still safe and effective methods of sending and receiving payments.
The advantages of money orders
Money orders have many advantages, the biggest one being the way they work like cash but with added security. You can track a money order if you send it via mail to confirm that it has not been lost, too.
Also, since they work like cash, the chances of a money order bouncing like a check are greatly reduced. A money order is also an ideal form of payment for someone that does not have checks or access to a debit card.
If you do have checks, you might benefit from using a money order if you prefer to not give out your account number or physical address. A check will always include your personal information, but a money order does not tell the payee anything about you.
This can provide you with peace of mind, though it will cost you a small fee. Lastly, there are numerous places that sell money orders. A quick Google search will put you in contact with a local store, bank, or post office that sells money orders near you.
The disadvantages of money orders
Though money orders are very useful financial tools, they do come with some disadvantages, one of them being the inevitable fee. Though minimal, there is a fee associated with purchasing a money order.
There is also a fee associated with cashing a money order if you don’t have a checking account. Another disadvantage is that you need to either have cash or a debit card to purchase a money order.
This can be fixed with features like Instacash, which gives you access to funds quickly. Even so, there can still be a bit of a roadblock.
For instance, the $1,000 limit can be a disadvantage as well. If you need to get a money order for $2,000 as soon as possible, then you may need to look into an alternative option, like a cashier’s check.
Money order vs cashier’s check
There are money orders and then there are cashier’s checks. You may be wondering, “What’s the difference?” Well, cashier’s checks allow you to take out a higher amount, unlike money orders that have a limit of $1,000. This makes cashier’s checks far more ideal when it comes to larger purchases.
A cashier’s check can only be purchased at a financial institution, and the fee is typically $10, which is a bit more expensive than the fee associated with a money order. Also, with a cashier’s check, you need to know exactly who you will be paying so that the person’s name can be printed directly on the check by the bank.
However, this isn’t the case with a money order. If you have to choose between a money order or a cashier’s check, consider your needs and the accessibility of each. Who needs the money? How much money do you owe? Do you have access to a bank account? If you owe less than $1,000 in total, then your best bet is a money order.
Money in many forms
There are lots of ways to get access to cash, like via a debit card that provides rewards, or a cash advance. A money order is another option!
Money orders provide a safe and efficient way to send and receive money to others. If it’s a payment in exchange for services or you just want to help a family member who is in a bind, a money order can come in handy.
Let’s face it. It’s easy to go overboard with your spending, and it’s not uncommon to need cash yourself or need to send cash to someone else quickly. MoneyLion gets it. With Instacash, simply link your checking account and instantly qualify for a cash advance!
There is cash out there in many forms, so make sure you are open to all of the opportunities. They can make it easier for you to stay on top of your finances, and MoneyLion can help.