What Is a Money Order?
In plain English
A money order is a prepaid paper payment instrument issued by a bank, post office, or retailer for a specified amount. You pay the face value plus a small fee upfront, and the recipient can cash or deposit it like a check. Money orders are considered safer than cash and more widely accepted than personal checks because the funds are prepaid.
Where Can You Buy a Money Order?
Money orders are available at the U.S. Postal Service, banks, credit unions, grocery stores, convenience stores like 7-Eleven, and retailers like Walmart and CVS. USPS money orders cost $1.75 to $2.40 depending on the amount. Retail locations typically charge under $2. Each money order has a maximum face value of $1,000, so larger payments require multiple money orders.
How Do You Fill Out a Money Order?
Write the recipient's name on the "Pay to" line, fill in your name and address in the purchaser section, and sign the front. Keep the receipt — it serves as your proof of purchase and includes a tracking number in case the money order is lost. Do not sign the back, as that area is for the recipient's endorsement when they cash it.
When Should You Use a Money Order Instead of Other Payment Methods?
Money orders are useful when you do not have a bank account, when a personal check is not accepted, when you want to avoid sharing your bank account information, or when mailing a payment and you want more security than cash. They are commonly used for rent payments, utility bills, and purchasing from classified ads.
Frequently asked questions
Can you cancel or refund a money order?
Yes, if it has not been cashed. You will need the receipt and must fill out a cancellation request form. The issuer charges a processing fee, and refunds can take weeks. USPS money orders require filing Form 6401 for replacements.
Do money orders expire?
Money orders do not expire in the traditional sense, but some issuers begin deducting service charges after one to three years of inactivity, reducing the value. It is best to cash or deposit them promptly.
Keep exploring
Related terms
Cashier's Check
A cashier's check is a check issued and guaranteed by a bank, drawn from the bank's own funds rather than your personal account.
Wire Transfer
A wire transfer is an electronic funds transfer between banks that moves money quickly, often same-day, and is commonly used for large or time-sensitive payments.
ACH Transfer
An ACH transfer is an electronic bank-to-bank payment processed through the Automated Clearing House network, used for direct deposits, bill payments, and money transfers.
Checking Account
A checking account is a bank account designed for everyday transactions like paying bills, making purchases, and withdrawing cash.