Western Union money orders offer more security than cash and greater reliability than personal checks. Because the sender has already provided the amount in the money order at a participating Western Union agent location, there's no chance it will be returned for insufficient funds. However, there are occasional cases of fraud regarding money orders, so financial institutions may place a hold on the funds.
Bank Rules on Money Orders
Anyone can purchase a money order at participating Western Union agent locations. The fee varies by location and the amount on the money order. Once acquired, a money order can be deposited or cashed at most financial institutions, just like a check. You can deposit it at an ATM as well as with a teller -- just be sure the money order is made out to you and that you've signed the back. The funds are usually available the following business day, if not immediately.
In certain situations, your bank may place some or all of the funds on hold for "a reasonable period of time," as a result of Federal Regulation CC, Availability of Funds and Collection of Checks. This extended hold is typically one to five business days. Each bank's policy for availability of funds must be clearly disclosed to account holders. Extended holds might be put on accounts that are repeatedly overdrawn, accounts for new customers, or because of a need to verify the money order. For example, if the money order is torn or crumpled to the point that the identifying numbers are hard to read, the bank may place an extended hold on the funds until it can verify the money order with Western Union.