Ben Todd | Jun 2, 2017 | 1
What Is A Money Order?
What Is A Money Order? A money order is a little like a guaranteed check. It is a way of turning cash into a check. Money orders are not as common as they used to be, and they will probably disappear forever one day soon after paper checks disappear. They are still used these days for things such as sending money through the post or for money laundering. They are a form of prepaid check.
How Does A Money Order Work?
If you buy a bank draft, then you have to go into your bank and have them create a bank draft while the money for the bank draft is put on hold in your account. A money order is a little easier to get. You simply walk into a bank, post office, or money order seller and you pay cash for a money order.
You may have to pay a small fee for the service, and the fee may depend upon where you buy your money order. A money order is bought with cash, which makes it quite a safe form of currency transfer, but having money wired or transferred electronically is now even safer than money orders and checks.
Despite the fact that money orders are bought with cash, you are able to use digital money to buy them. For example, you may pay for your money order using your debit or credit card. The stipulation is that the money order is prepaid, so you cannot pay with a method that puts a hold on the funds, nor can you pay with a check for the same reason. You have to pay with hard cash or readily available digital currency.
There Are Limits On How Much You Can Spend
Due to money orders being used for money laundering, the government has set limits on how much money you may spend on a money order. At the moment, the limit is around $1000 per money order.
You may buy them in post offices and you may buy them with certain companies in the US, and each charges its own fee for your money order. In most cases, banks and credit unions charge the highest fees.
If you want to buy something that costs more than $1000, or if you want to send somebody some money and you want to send more than $1000, then there is nothing stopping you buying numerous money orders.
What Is A Money Order Used For?
Some people do not have bank accounts and need a way to pay for things such as rent. They can prove they paid for money orders with their receipts, and they can get a receipt for the things they pay for with money orders. It is not as convenient as having a bank statement to prove you paid things such as your rent, but it is not a bad alternative.
Some people use them because they want to send money in the post and it is a very bad idea to send cash in the post because it will be stolen by somebody along the way.
There are courts that demand cleared funds for the payment of fines, and a money order is something you can send across the state line in the mail to pay for your fines. There are also people who are visitors in the country, which means they do not have a bank account and have to rely on things such as money orders if they have not set up a Transferwise borderless account.
Some people use money orders because they are afraid to send a check. They are not sure that the money will be in their account when the check is finally cashed, so they send a money order because they know it is already paid for.
There are also people who use money orders to send money overseas. US Postal Service money orders may be sent to 28 countries and people in those countries are able to have the money orders converted into their own currency for a conversion fee. Some people also send money orders because it is cheaper than wiring money overseas. Sometimes, the cost of wiring money abroad is a little high, so people send a money order instead. If you are worried about the cost of sending money abroad, then take a look at how much Transferwise or CurrencyFair are charging because wiring money abroad is not nearly as expensive as it used to be.
What Is A Money Order Good For?
A money order is good for sending money through the post and money laundering. It is true that they may be used by people who do not have a bank account, but they are not a good option in that regard. It is far better to have a bank account.
If you are from a different country, then you may sign up for a Transferwise Borderless Account and use that. There are also online wallets that you may use in place of a bank account for a while. In addition, if you do not have a bank account because you have mismanaged your account in the past, then you may pay a monthly fee for a second-chance bank account. All of these options are better than using money orders.
If you are going to use money orders, then use them for sending money through the post. In an ideal world, you should send such funds digitally because it is easier and safer. Nevertheless, if you want to send something such as a card and you want it to have money inside, then a money order is a good option. You can put a name on it so that people who poke through your mail will not be able to cash it themselves. Plus, it isn’t a check, so a mail thief doesn’t gain partial access to your bank account details.
A money order is also good for money laundering because it is another way of passing dirty money through as many hands as possible before it is discovered. People can do things such as spend dirty money on money orders, use those money orders to buy things, and then sell those things for hard (clean) cash.
Conclusion – Use For Smaller Purchases And Sending Money
If you have to use money orders, then only use them for smaller purchases and sending money through the post. However, there is still a risk when sending money orders. There are plenty of examples of people being caught stealing from the mail, but even now in 2017 (when this was written), there is a postal worker in court and claiming to have stolen over $10,000 worth of money orders from envelopes.
As I mentioned earlier, money orders will disappear one day when checks finally disappear. In this digital age, there is less and less need for money orders. Consider your alternatives before you choose money orders, and make sure you keep your receipts both when you buy your money orders and when you spend your money orders.