What is a money order?
You might have heard the term money order before but be unclear about how it works or why you might want to use one. Essentially, money orders are a secure form of payment that can be obtained from a bank and used in the place of cash or checks to settle payments owed to creditors. Find out more about how to deposit a money order and the maximum amounts for money orders, right here. In order to pay with a money order, youll need to prepare in advance by going to the bank or to another seller to obtain it. You can buy money orders at places such as Post Offices and Western Unions provided that you pay upfront, or you can visit your bank to get your order. Youll need to know the details of the person you want to pay and whether you want to balance the payment in cash or by card. The form will need both your details and your payees details. It also needs to be signed by both you and the person youre paying, which is one of the reasons its considered a safe payment option. Theres also usually an option to add a reference, so your payee knows who the money is coming from and what youre paying for. This is particularly relevant if youre paying bills or balancing an account. You should then get a receipt for your money order, which will contain all the details youve filled out. Not only should you keep this as your proof of payment, but it will enable you to track your money order to make sure the money reaches its intended recipient, while also helping you stay on top of your expenses. As well as covering the cost of the money order, youll likely have to pay a little extra to cover the service charge associated with a money order. Theres no set rate for this and is decided by the individual store or bank  so it may be worth looking around to see if youre getting the best value for money. How to deposit a money order  You can cash a money order in a similar way to cashing a check. You dont have to go to the bank or store that issued the order to be able to cash it, but you may find that this can speed up the process. Similarly, you can take it to your bank and have it paid into your bank account rather than withdrawing the cash itself. Because money orders dont typically include your bank account number, youll have to go to your bank to make sure it reaches the right place. There shouldnt be a fee for depositing a money order  unlike creating one. Maximum amounts for money orders  Limits on money orders are set by each individual issuer so its worth looking around to see if you can find one that best meets your needs. However, there is typically a cap at around $1,000  which is the standard for Post Offices. Some banks choose to set their limits lower than this. Money orders are often considered the safer option when it comes to making secure payments, with many people choosing to use them instead of cash or checks. The first obvious benefit is that you dont need to have a checking account in order to use them and you also dont need to include your account details. This means you get the benefit of a guaranteed payment (unlike with personal checks) without having to disclose your information. You can also mitigate the risk of theft when youre paying by post if you use a money order instead of the cash amount. We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.