Checks are slowly falling out of fashion in the finance world, but money orders are still commonly requested. Your landlord or even the government may request money orders instead of checks or online payments. If they do, do you know how to fill out a money order? If your answer is no, the good news is that filling it out is fairly easy.
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What Are Money Orders Used For?
In its simplest form, a money order is a prepaid check. Instead of drawing against your funds in the bank, you provide these funds upfront. Because of this, you can reasonably use money orders to pay for almost anything you would pay for via check.
However, unlike a check, you can’t just fill out an order and give it to the recipient. A transaction must take place that allows an authorized person to accept the funds used to back the order.
Specific uses may compel many people to learn how to fill out a money order:
- Transporting large amounts of cash safely and discreetly
- Paying for goods and services with bigger price tags
- Conducting business with strangers
Who Needs To Learn How to Fill Out a Money Order?
Anyone may end up using money orders at least once in adult life. However, these demographics may have a higher likelihood of doing so:
Unbanked Adults
CNBC reports that 25% of American households do not have sufficient access to bank accounts or may not have any at all. In these instances, money orders become an attractive and viable medium for making many payments.
Immigrants
Immigrants pay thousands of dollars in fees by the end of the process. They need to pay fees at each step of the process and may do so via money orders.
Renters
Landlords often allow renters to pay rent by money order. This is especially likely when the landlord lives some distance away or primarily serves a lower-income renters’ market.
When Should You Use Money Orders?
There are very few instances when individuals or organizations demand payment by money order only. However, there are certain circumstances where you may prefer this option over its alternatives. Here are three times you’ll be glad you know how to fill out a money order.
Distrust Exists
If the recipient barely knows you or distrusts personal checks, you can pitch money orders as an alternative. While not everyone or every business accepts money orders, it doesn’t hurt to ask.
Privacy Preferred
When your bank provides a certified check or other options, it may sometimes provide personal information you do not wish to share. You have more control over what to include with money orders.
Guaranteed Payment Necessary
When the risk of nonpayment has severe consequences, you may wish to reconsider other payment options. Note that banks routinely block transactions they view as suspicious, even when you have sufficient funds.
Examples of Using Money Orders
Example 1
Rebecca wants to quit her job and travel across America. She finds a bus she wants to convert into an RV and offers to write the seller a personal check on the spot. He refuses to accept it because he does not know her well enough. She visits a nearby post office and buys a money order in the amount of the agreed-upon price.
Example 2
Pete recently found a beautiful loft apartment in the city for rent. However, his landlord lives in another state and Pete has no bank account. He offers to pay by money order. Pete then visits the local CVS and gets advice from the clerk on how to fill out a money order. He purchases one for the security deposit and one for the first month of rent and mails them off.
Steps for How To Fill Out a Money Order
NerdWallet simplifies the process into five main steps. These are the key points to keep in mind:
- Complete Pay to the Order Of: Fill in the name of the individual or organization you want to make the money order payable to. Always do this first, so that if others get ahold of the order, they cannot cash it.
- Add Purchaser Info: When you fill out a money order, you become the purchaser. Fill in your name and contact information so that the recipient can reach you directly if there are any issues.
- Include Account Info: If you plan to use the money order to pay a bill, include an identifying factor beyond your name, where applicable. For instance, you may list your account number.
- Sign the Money Order: At the bottom of the document should be a section for the purchaser’s signature. Sign here.
- Secure Your Receipt: When you get your receipt, store it in a safe place. You can present this as proof of payment if requested. It can also serve as documentation to track your payments.
Quick Questions
Yes, you can purchase a money order and make it out to yourself as the recipient. In this instance, it works similarly to a traveler’s check.
You may find that some places set a limit on money orders. This differs by location, but a limit of $1,000 is not uncommon. People often purchase multiple money orders to get around this.
Money orders offer more protections than using cash, but they are not fraud-proof. They are commonly used in overpayment scams.
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