A money order is a specific type of pre-paid check. It is often used to send payment through the mail when personal checks are not accepted by the payee. A post office money order is simply a money order that is issued by a post office. Knowing a little about the benefits and limitations of a post office money order will help you decide if one is right for you.
A money order, according to the Uniform Commercial Code, article 3, section 3-104, is technically a check because it is a signed negotiable instrument that orders payment to be made to an individual or entity. The main difference between a money order and a personal check is that instead of directly involving your personal bank account, a money order is drawn on the account of the company that sold you the money order.
Money orders are considered safer than personal checks because they are pre-paid, and because they do not provide your personal account information to the person you are paying. Companies that issue money orders make money by charging a small fee to the person buying the money order.
Post Office Money Orders
Like many businesses, the United States Post Office provides money orders to its customers. According to the USPS website, domestic money orders will cost you $1.10 for amounts up to $500 and $1.50 for money orders from $500.01 to $1000 at the time of this article. The USPS does not currently offer money orders in larger amounts than $1000. Post office money orders must be purchased in person at a post office branch, and can be paid for by cash, debit card, or traveler's check.
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Benefits and Limitations of Post Office Money Orders
Money orders issued by the United States Post Office are accepted as payment anywhere in America. They help protect you from exposing yourself to identity theft and check fraud by not referencing your personal account number. You can also track whether they have been cashed, plus receive a refund for a lost or stolen money order.
USPS money orders have two main limitations: They are limited in face value to $1000, so if you have a large purchase to make, several money orders will have to be purchased, and the fees charged by the post office are among the highest charged by any money-order provider.
Alternatives to Post Office Money Orders
There are a number of companies besides the post office that sell money orders. These included grocery stores, check-cashing businesses, and some banks. Be sure to ask how much the fee for a money order is before purchasing it as some will be much lower than others.
Most of the major benefits offered by money orders will apply no matter which provider you purchase from. But be sure to check the fine print before buying and understand how to track the status of your money order and what protections you have if the money order is lost or stolen.