Money Order

What Is a Money Order?

A money order is a certificate, typically issued by a government or banking institution, that permits the stated payee to receive cash on demand. A money order works similar as a check, in that the person who purchased the money order might stop payment.

Money orders are promptly accepted and changed over completely to cash and are frequently utilized by individuals without access to a standard checking account. These instruments are an acceptable form of payment for small obligations, both personal and business, and can be purchased for a small service fee from most institutions.

Money orders were first issued by American Express in 1882 and later became advocated as secured checks.

How Money Orders Work

A person who purchases a money order should finish up the name of the beneficiary on a form and the amount that the beneficiary ought to receive. Most money orders have a maximum limit of $1,000. Consequently, a buyer would have to purchase numerous orders on the off chance that he wants more than the stipulated limit. Make certain to finish up the money order carefully; it's an oddball purchase and you really want to keep great records of it.

The financial institution or authorized body that issues the money order to the payer will have the payee's name, the issuer's name, and the amount of money that can be cashed. This dollar value does exclude the fees charged to the payee. Factor in all costs while purchasing money orders. A bank or credit union will typically charge in excess of a convenience store to issue money orders.

A money order isn't a check, and it's harder to trace one; keep your receipt until you are certain the order has been received and cashed.

At the point when a purchaser pays for a money order, it accompanies a receipt that incorporates the serial number of the money order. This information ought to constantly be kept until the purchaser is certain the money order has cleared. Without a receipt, following a money order can be troublesome or even incomprehensible.

Benefits versus Drawbacks

In certain circumstances, paying with a money order can be safer than paying with a personal check. Since personal checks incorporate the account holder's routing number and bank account number imprinted on the base this private information can be taken and used to make and sign fraudulent checks. Conversely, money orders do exclude personal information about the purchaser.

Pros

Money orders do not include personal information, such as your bank’s routing number and your bank account number.
The recipient can cash the order at a local bank or credit union—there’s no requirement to go to the issuer to have it cashed.
Money orders can also be deposited into a bank account, for no fee.
The money order can be issued in one country and be cashed in another country.

Cons

Money orders can be more difficult to track than a personal check—to find out whether the money order has been cashed, for example, can require forms and take weeks.
Cashing the money order can incur a fee.
There may be a delay in getting the funds if they are cashed at a bank other than the issuer.
Money orders can be fraudulent; be wary about receiving them from people you don't know and don't spend money orders you deposit in the bank until you know the bank was able to cash them.

On the downside, money orders can be more hard to follow than a personal check. To decide if a personal check has cleared, check essayists just have to visit their bank or check out at their online account for information about its status.

To follow a money order, the issuer must finish up tracking forms and pay an extra fee to realize whether the money order has been cashed. The whole cycle for investigating the situation with a money order can require weeks. The USPS offers an online money order inquiry service that permits buyers to include the money order number and get a report on its status.

Notwithstanding checks and money orders, other financial instruments that can be utilized to send guaranteed funds to an individual or business incorporate secured checks, wire transfers, bank drafts, and cashier's checks.

Special Considerations

The beneficiary who receives the money order doesn't be guaranteed to need to go the very issuer that sold the money order. The beneficiary can have it cashed at a neighborhood bank or credit union, however may not receive the funds at the same time, contingent upon the institution's policy. In the event that the payee has no account, cashing the money order at the issuer's office is a great option.

Be that as it may, a payee doesn't need to cash the money order right away. They can deposit it into a bank account, much as you would do a check. Depositing money orders is a decent option for payees who are worried about the fees charged to cash the certificates at different areas.

Since the fees are certain to reduce the amount of money that will be received, depositing it with no extra charges at a bank will guarantee that the account holder keeps all the money paid to them.

As is many times the case, a money order can be utilized as a vehicle to send money outside the country. An issuer with numerous branches in various countries can issue a money order in one country that can be cashed in another country. International money orders accordingly give a cheap and swift method for sending money across the border.

Features

At the point when you purchase a money order, you might need to pay a small fee.
You can purchase money orders at banks and credit unions, and furthermore at different areas like big box stores, post offices, and, surprisingly, a few gas stations.
International money orders can be a reasonable method for sending across the border and overseas rapidly.
Money orders are a safe alternative to utilizing cash or checks.