Money Order Basics
A money order is similar to a check, so you can treat money orders just like checks made out to you. You can’t spend money orders like cash, but they represent funds in somebody else’s account. To use those funds, you have to cash or deposit the money order.
Depositing Money Orders
If you don’t need cash right away, your best bet is probably to deposit the money order (instead of cashing it) in your bank account. You can get cash when you need it -- but keep funds safely in the bank until then. Banks don’t charge fees to take deposits, and you’re probably familiar with your bank, so start there.
Cashing Money Orders
If you can’t wait, you’ll have to cash your money order. Take it to your bank and ask if they’ll provide cash immediately on the money order. If you can’t get to the bank, try to visit the money order issuer (Western Union, US Postal Service) to minimize fees and increase your chances of getting cash quickly. Finally, check cashing stores, convenience stores, and grocery stores may also cash money orders.
To cash a money order you’ll need valid identification.
Fees for Cashing Money Orders
If you cash a money order, expect to pay (unless you cash a USPS Money Order at the post office). You may have to pay transaction fees and/or a percentage of the proceeds. These fees can add up, especially at check cashing stores and convenience stores. It’s almost always worth opening an account at a bank or credit union -- even if they charge account fees -- instead. Once you’re a customer, you can go to a bank and cash money orders without additional charges.
Is it Any Good?
Money orders are often used in scams. If you want to make sure you’ll be paid, verify that the money order is legitimate before accepting it. You can never be 100% sure, but you can identify most scams by calling a money order issuer to verify funds.
