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Household money and budgeting

Money order

A prepaid paper payment for a set amount, bought up front and made out to a named payee; the U.S. Postal Service sells domestic ones up to $1,000.

What It Means

A money order is a paper payment you buy for a set amount, pay for up front, and make out to the person or business you're paying. Because the money is collected when you buy it, a money order doesn't draw on your checking accountChecking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit. See more the way a personal check does. The U.S. Postal Service sells domestic money orders up to $1,000 each, paid for with cash or a debit card plus an issuing fee.

Try It: How Many Money Orders Do You Need?

USPS sells domestic money orders up to $1,000 each. Enter what you need to pay and how you'll pay at the counter.

Money orders needed3
Written for $1,000 each2
Last one written for$400

USPS takes cash or a debit card for money orders.

Each money order also carries an issuing fee that depends on its amount. Check the current fee at the counter or on usps.com.

How It Sounds at Home

  • "The landlord wants the deposit as a money order."
  • "Grab two money orders at the post office on your way."
  • "Keep the stub, that's how you track it."

The Breakdown

An example. Leo's new landlord wants a $1,750 security depositSecurity depositMoney a tenant pays a landlord at the start of a lease, held to cover unpaid rent or damage beyond normal wear and tear and returned, minus listed charges, after move-out. See more and doesn't take cards. At the post office Leo buys two money orders, one for $1,000 and one for $750, and pays cash plus the issuing fee on each. He fills in the landlord's name at the counter and keeps both receipts, which USPS says you need in order to track a money order.

Where it goes wrong. A few months later Leo sells his bike online for $300. The buyer mails a money order for $900 and asks Leo to send back the $600 difference. That's the overpayment scam the Consumer Financial Protection Bureau warns sellers about. The FTC notes that fake checks can look like money orders, that a bank has to make deposited money available quickly, often within a day or two, and that it can take weeks to learn the item was bad, by which time the $600 Leo sent is gone.

What to watch for

  • Keep the receipt for every money order you buy.
  • Before you rely on a postal money order someone gives you, check it with USPS's Check Money Order Status tool.
  • Never send back "extra" money from a check or money order a buyer overpaid with.
  • To cash a postal money order, bring a photo ID to a post office and sign it at the counter, or take it to a bank.

Good to Know

USPS sells domestic money orders up to $1,000 each, takes cash or a debit card for them but not a credit card, and charges an issuing fee that depends on the amount. You can cash one at any post office with a photo ID, signing it in front of the clerk, or at a bank. If one is lost or stolen, USPS charges a processing fee to replace it and says confirming the loss can take up to 30 days, so keep the receipt somewhere safe. The Consumer Financial Protection Bureau and the FTC both warn about buyers who pay with a money order or check for more than the price and ask for the difference back.

FAQ

What's the most you can send with one money order?

At the post office, $1,000 for a domestic money order, according to USPS. For a larger amount, buy several, and each one carries its own fee.

Where can I cash a money order?

USPS says a postal money order can be cashed at any post office, where you show a photo ID and sign it in front of the clerk, or at a bank.

How is a money order different from a cashier's check?

A money order is bought for a set amount, and at the post office it tops out at $1,000. A cashier's checkCashier's checkA check a bank issues and sells, drawn on the bank's own funds, so the bank itself is responsible for paying it. See more is issued by a bank and drawn on the bank's own funds, so the bank itself is responsible for paying it, according to the OCC.

Do It in Buhata

Budget

Log each money order you send in Budget with its amount and who it's for, so the payment is on record until it's cashed.

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Related Terms and Categories

  • Cashier's check

    A check a bank issues and sells, drawn on the bank's own funds, so the bank itself is responsible for paying it.

  • Peer-to-peer payment

    Money sent directly from one person to another through a payment app or a bank's app, such as Zelle, Venmo or Cash App.

  • Checking account

    A bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit.

  • Digital wallet

    An app, such as Apple Pay or Google Wallet, that stores your payment cards on your phone so you can pay by tapping it or choosing a card at checkout.

Household money and budgeting

Sources

U.S. Postal Service, "Money Orders"; U.S. Postal Service FAQ, "Money Orders - The Basics"; U.S. Postal Service, "Check Money Order Status"; Consumer Financial Protection Bureau, "Someone bought something I was selling online and sent me a check or money order for more than the price of the item. They asked me to send back the difference. Should I be worried?"; Federal Trade Commission, Consumer Advice, "How To Spot, Avoid, and Report Fake Check Scams"; Office of the Comptroller of the Currency, "OCC Offers Tips to Help Consumers Avoid Cashier's Check Fraud" (2007); Office of the Comptroller of the Currency, Bulletin 2007-2, "Fraudulent Cashier's Checks"

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