What is a money order? How it works + how to fill one out

Money orders may provide a fast and safe way to send funds. A money order can’t bounce as the cash amount plus the fee is paid, and therefore doesn’t rely on the funds being available in the sender's checking account.

Keep reading to learn how to fill out a money order, where to get them, some pros and cons, and more.

Table of contents

• How do money orders work?
• Key characteristics of a money order
• Where to get a money order
• How to fill out a money order
• 6 common mistakes when filling out a money order
• How to cash a money order
• Digital vs. traditional money orders
• Potential advantages and disadvantages of money orders
• Are money orders safe?
• How money orders compare to other payment options
• Send funds with PayPal
• Frequently asked questions

How do money orders work?

Money orders get requested by the sender and sent to the recipient. It is a paper document, similar to a check, that you purchase for a specific amount. The recipient can then cash it for the amount of money it's worth.

Here’s how it works:

• The sender requests and pays for the face value of the money order in cash or with a debit card, along with a small service fee.
• The distributor prints the money order, which includes the amount and a unique serial number.
• The sender fills out the money order with the recipient's information and their own details.
• The sender gives or mails the money order to the recipient.
• The recipient takes the money order to their bank, credit union, or another location (like a grocery or convenience store) to cash it out. They may be charged a fee to do so.

Key characteristics of a money order

Money orders can be a good alternative to cash or personal checks. This payment method has a unique set of rules, making it a great option when you need to be sure your payment arrives safely.

Here are some key features of money orders:

• Prepaid: You pay for the full amount of the money order upfront. This means the funds are guaranteed, and the money order can't "bounce" like a personal check.
• No bank account required: You don't need a bank account to buy or cash a money order. This makes them an option for people who prefer not to use a traditional bank.
• Transaction limits: Most money orders have a maximum value, often up to $1,000. For larger payments, you may need to purchase multiple money orders.
• Fees: A small fee is charged when you buy a money order. The cost is usually low, depending on where you buy it.
• Proof of payment: When you purchase a money order, you get a receipt with a tracking number. You can use this to confirm if and when the recipient has cashed the money order.

Where to get a money order

You can typically purchase money orders from a third-party distributor or financial institution. Let’s explore how to purchase a money order and where they are distributed.

Specific places include:

• Banks
• Credit Unions
• US Postal Service
• Grocery stores
• Convenience stores
• Check-cashing stores
• Payday loan stores

The process for purchasing a money order will depend on where the sender decides to buy it. Once a distributor is found, the next step to consider is how to fill out the money order. In most cases, the distributor will be able to guide senders through the process.

How to fill out a money order

Filling out a money order is a lot like filling out a check, but even easier. Taking your time to fill it out correctly ensures your money gets to the right person.

Step 1: Write the recipient's name

On the "Pay to the order of" line, write the name of the person or company you are paying. Make sure you’ve spelled it correctly.

Why it's important: Ensures only the intended person can cash it

Step 2: Include your information

Fill out the "Purchaser," "Sender," or "From" field with your name and address. This identifies you as the buyer of the money order.

Why it's important: Can help you track the payment if needed

Step 3: Add a memo or account number (optional)

There is usually a memo line or "Payment For" section. You can use this to add an account number or a brief description, like "rent" or "invoice #1234."

Why it's important: Helps the recipient know what the payment is for

Step 4: Sign the front

Sign on the "Purchaser" or similar line. Do not sign the back of the money order. That is for the person you are paying to sign when they cash it.

Why it's important: Authorizes and validates the money order

Step 5: Keep your receipt

Tear off the stub or receipt from the money order and keep it in a safe place. This little piece of paper is your proof of purchase. It includes a tracking number you can use to confirm the recipient has cashed the money order.

Why it's important: Allows you to track the money order

6 common mistakes when filling out a money order

While money orders are simple, it’s also easy to make a few common mistakes. Taking a moment to double-check your work can save you a lot of hassle. Avoiding these errors ensures your payment gets where it needs to go without any issues.

1. Leaving the payee line blank

Leaving the "Pay to the order of" line empty is a big risk. An empty line means anyone could write their name in and cash the money order. It is like giving away free money.

Tip: Always fill in the recipient's name before you do anything else.

2. Wrong payee or purchaser information

Filling in the wrong name for either the payee or the purchaser can cause problems. The bank may refuse to cash it if the names don't match up. This can delay your payment and create a headache for the recipient.

Tip: Double-check the spelling of all names and addresses before you complete the money order.

3. Amount errors

It's important to write the amount correctly in both numbers and words. If there is a mismatch, the bank may not honor the money order, which can cause a major delay in your payment.

Tip: Double-check that the amounts match, written in both numbers and letters.

4. Crossing out mistakes

Never cross out a mistake on a money order. Most places will not accept a money order with any mark-outs or corrections. It's seen as a security risk, and it will be returned to you.

Tip: If you make a mistake, don't try to fix it. Buy a new money order and start over.

5. Signing in the wrong place

There are two places to sign a money order. You, the purchaser, sign the front, and the recipient signs the back. If you sign the back, the money order becomes invalid.

Tip: Only sign the front of the money order. Leave the back blank for the person you are paying.

6. Losing your receipt

Your receipt has a unique tracking number on it. Losing this receipt can make it very difficult to track a payment or get a refund since you have no proof that you paid for the money order.

Tip: Put the receipt in a safe place as soon as you get it. Consider taking a picture of it with your phone.

How to cash a money order

Cashing a money order is generally straightforward. Once the recipient receives a money order, they can take it to their chosen place to claim the cash, such as a bank or credit union where they have an account, or a store or post office that offers this service, usually for a fee. The recipient will need to:

• Show a valid government-issued photo ID, like a driver's license
• Sign the back of the money order once at the location to prevent someone else from cashing it

A few things can impact cashing a money order, such as:

• If the money order is damaged or altered
• It’s been a long time since the issuing date; some issuers might charge a non-cashable fee after a certain amount of time, taken from the value of the money order

Digital vs. traditional money orders

Instead of a physical piece of paper being issued, digital money orders are sent via digital technology and online services. Some potential differences between traditional and digital money orders include:

Potential advantages and disadvantages of money orders

Whether a money order is right for you really depends on your needs. They offer some clear advantages but also have a few downsides. Knowing both the pros and cons can help you decide if a money order service is the best way to get your money where it needs to go.

Are money orders safe?

Yes, money orders are generally considered a safe method of sending money. While digital money orders may provide greater security and protection, traditional paper money orders can also be a safe way to transfer money.

A money order can only be claimed by the person or business it is addressed to, which makes it a secure way of sending money. If a sender suspects that a money order has been lost or stolen, they can cancel the order to prevent someone from fraudulently cashing the money order.

How money orders compare to other payment options

There are several money order alternatives for sending money to an individual or business. Knowing these options can help you choose the best way to manage your money, whether you're paying a bill or sending a gift.

• Wire transfers: A wire transfer electronically transfers money from one bank or financial institution to another. This is often used for large or time-sensitive payments because the funds are guaranteed and clear quickly.
• Bank transfers: This is a broad term for electronic transfers between bank accounts. Many banks offer free or low-cost transfers, especially through digital banking apps.
• Cashier's check: These are issued by a bank and guaranteed by the bank's own funds. Cashier's checks are often used for large transactions, like a down payment on a house or a car.
• Personal checks: A personal check is a paper check you write from your own bank account. While convenient, they can bounce if you don't have enough money in your account.
• P2P payments: Send funds instantly to another person's account with services like PayPal. It's fast and easy, but some fees may apply for certain transactions or international payments.

Send funds with PayPal

Money orders are a secure alternative to cash that can't bounce like a personal check. While they have some limitations, like transaction limits and the need for in-person purchases, they serve a specific purpose well.

However, in our fast-paced, digital-first world, there are more convenient and instant options available. Services like PayPal let you send funds directly from your phone to someone else's email address or phone number.¹ The money can typically arrive quickly, and you can track your payment in real time.

Learn about sending and receiving money with PayPal.