Money orders are a great alternative to paying cash or check, especially if you do not have a checking account. Even if you do have a checking account, if a creditor or vendor will not take a personal check, a money order is a great convenience, and often a cheaper solution than purchasing a certified check.
There are many places a money order can be purchased so a payment can be made by this method. Here are a few of the most common places a money order can be purchased in the U.S.:
• United States Postal Service (USPS)
The USPS is one of the most popular places in the U.S. where people turn to for their money order needs. Money order prices in the postal office are reasonable, but you will be charged according to the amount you need.
For domestic money orders the current 2011 rates charged are $1.10 for amounts from $0.01 to $500.00; money orders $500.01 to $1,000.00 cost a little more at $1.55. International money orders are made up to $700 and this costs $4.25.
• Western Union or independent merchants
Many major supermarkets, convenient stores or independent check cashers sell Western Union money orders as a service. Typically, merchants who do sell them have a yellow and black Western Union Money Order sign displayed around their front window.
Rates are more costly for Western Union money orders than USPS, and rates are contingent upon the amount needed and the locations sent. The benefit is Western Union sends the money order for you electronically. You can learn more about Western Union money orders at the company’s website.
There are also some independent merchants such as MoneyGram International. These also typically cost more than a standard USPS money order (approximately $12 for a $200 money order sent in the U.S. to a U.S. recipient), but it is another option if you need it. The advantage of purchasing money orders through an agency is they can electronically transfer the money for you.
Before choosing any company to handle your money order needs, be sure and check out any bad business practices or scams to ensure you don’t lose your money during the transaction.
• A bank
Banks do not theoretically offer money orders for sale, but they do sell cashier’s checks. In this case the customer pays the bank and the bank is the signer of the check. The rates of purchasing one varies depending on the bank, but most of cashier’s checks cost around $3-$5.
Money orders are pre-purchased from third party vendors, and any of the above places is an acceptable place to buy a money order to fit your needs. When you purchase a money order you pre-purchase the amount you want to pay to your creditor or person you owe money to. It is important to know ahead of time the exact amount of the payment you need to make.
Keep in mind, in the U.S. since the inception of the Patriot Act, there is higher stringency when it comes to buying large amounts for money orders. Therefore, money orders are limited in dollar amount. You may need to purchase a few money orders if you need to make a large payment, because agencies, such as the USPS, do limit the amount you can purchase.
Money orders are a good convenience when you need an alternative to a personal check and a credit card isn’t an option for payment. Just remember, the exact amount of the payment must be known prior to purchase of the money order. In the U.S., the USPS is the cheapest option for purchasing a money order. However, if you are in a rush or need the money sent electronically, then other options may be more preferable.