Money Order

Money orders were first introduced in 1864 when the U.S. Postal Service started selling them as a cash alternative to reduce the number of post office robberies. Today, it’s still a secure way to pay bills or send money domestically or internationally. In this brief explainer, we’ll discuss what money orders are, their main advantages and disadvantages, and whether you need one in the first place.

What Is a Money Order?

A money order is a check-like paper certificate issued by a bank or government. Although they’re often confused with checks, these payment methods aren’t interchangeable. In fact, money orders are the opposite of checks, as to get one, you need to prepay for it. There are multiple places where you can purchase money orders, including banks, post offices, most grocery stores, and pharmacies.

The principle behind the money orders’ effectiveness is pretty simple: after providing your and the payee’s personal information, you’ll need to prepay the preferred amount. According to the U.S. Postal Office, the maximum amount of a single domestic money order is $1,000, while international money can vary depending on the country but can’t exceed $700. The price of the money order varies between $1 and $5.

Money Orders: Main Pros and Cons

As with any other payment method, money orders come with a set of advantages and disadvantages. Here are the main ones to consider:

Pros:

• Can be sent both internationally and across the country.
• Doesn’t include detailed financial or private information, which makes money orders safer than personal checks.
• Widely available, from postal offices to grocery stores. You can cash the money order at a credit union, bank, or some grocery stores and pharmacies.

Cons:

• It comes with a fee for buying and cashing it.
• It is difficult to retrieve your money if you lose cash in the money order. Finding lost money orders required you to embark on quite a financial adventure, as you had to pay additional fees, fill out the tracking forms, and sometimes wait for weeks. Luckily, the U.S. Postal Service has an online service where you can check the status of your money order.
• Can be subject to fraudulent activity.

When Should You Consider Buying One?

Although money orders shouldn’t be your go-to payment method, there are multiple scenarios where using one may be a good idea. Let’s take a look at some of the most common ones:

• You prefer privacy. If you want to save your money securely without including your sensitive financial information, money orders are a good alternative to other payment methods.
• You want to send money outside the country. The U.S. Postal Office sends international money orders to multiple countries with a maximum amount of up to $700.

To wrap it up, with the proliferation of online banking services, credit cards, and cryptocurrencies, money orders may seem like an antiquated payment method. Nevertheless, it still preserves its relative popularity due to its security and ease of access and remains a much-used payment method to cover bills or send money inside or outside the country.