Spending

A step-by-step guide to filling out a money order

Twenty/20

In the age of Venmo, Zelle, and PayPal, you may think money orders are going the way of the telegram. But even with an almost 3% drop from the previous year, 83 million money orders were processed by the Federal Reserve in 2018.

A money order is a payment for a specific amount that the payer, or the purchaser, is required to pay upfront in cash or credit. Money orders, which are paper forms like traditional checks, are considered safer than checks because they're prepaid, so there's a safeguard against the payment bouncing.

You can purchase a money order from banks, credit unions, financial services companies such as Western Union, and the post office, as well as some gas stations, convenience stores, grocery stores, drugstores, and big-box stores such as Walmart. Issuers will typically charge purchasers between $1 and $10, according to U.S. Bank, and cap the amount you can send per money order at around $1,000.

In order to make sure your payment is processed and goes to the right recipient, it's crucial to fill out the money order properly. Formats may vary slightly from issuer to issuer; still, this step-by-step guide can see you through.

Illustration by Euralis Weekes

Step 1: Fill in the recipient's name

On the line that reads "pay to the order of," fill out who you want this money order to go to. That may be the name of a person or a company. Include the recipient's full address and a note about what the payment is for. Make sure you have the correct spelling of the recipient's name to ensure that there are no hiccups when the recipient tries to cash the money order.

If you're sending a money order as a form of payment for a bill, there will be a space for you to include your account number.

Step 2: Write your address in the purchaser section

Under the purchaser section, write out your full name and address so that the recipient or wire service can contact you if there are any issues.

Step 3: Sign the bottom

Make sure to sign the bottom of the money order so that the order becomes official and can be processed.

Step 4: Save your receipt

Save your receipt and put it in a safe place until the recipient confirms with you that they've received your money order. In the event that you need to track or cancel the money order, you'll need the receipt to do so.

Why you might use a money order

Money orders are especially useful if you do not have your own bank account, or if your credit or debit card has been lost or stolen. That's not unusual. In fact, 25% of U.S. households are unbanked or underbanked, meaning that the household had a checking or savings account, but used other methods outside of their bank to send money or pay bills, according to a 2017 survey by the Federal Deposit Insurance Corp.

More than half of unbanked households in the survey said they don't have enough money to keep in an account. 30% said they don't trust banks, and 9% reported their nearest branch is in an inconvenient location, according to the survey.

"Money orders are often utilized by consumers that do not have a checking account, or in instances where a personal check is not accepted," says Greg McBride, chief financial analyst at Bankrate. Some situations, like the payment of certain bills or sending money abroad, call for money orders as well, especially if you don't feel comfortable using a personal check that includes information like your account number and address.

Though you have many options for where to buy a money order, consider an issuer that's convenient for you and offers low fees. Depending on your bank, you may not be charged a fee at all. If you don't mind paying a small price for the convenience of a closer issuer, it might be a better use of your time to buy a money order at your local grocery store or gas station.

Money orders also provide an added level of security. If you're sending a loved one a birthday card in the mail with a $20 bill or check, you might consider sending them a money order instead. If the gift gets lost, the purchase can be tracked.

When you buy a money order, the issuer will provide you with a receipt that has a tracking number you can use to confirm that your money has reached its destination. If it hasn't, you can return to the issuer to cancel the money order and send a new one. Just be aware that there is often a processing fee involved for these kinds of transactions.

Despite all of the digital methods available for sending money, McBride expects that money orders will continue to be a "relevant option" for the "unbanked consumer."

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