Suppose you’ve decided to sell your old couch on Craigslist. You find a buyer who agrees to the price and wants to pay with a money order. Is this a safe form of payment? And is it going to be a big hassle to turn it into cash? The answers are yes, it is, and no, it won’t. A money order is just like a check, but it’s prepaid. Instead of drawing it on their own account, the payer purchases it with cash. This means it’s actually safer for you than a personal check because there’s no risk it will bounce. As for cashing it, that’s even easier than cashing a personal check. You have more choices about where to do it, so you can choose the place and time that’s most convenient for you.
Turning a money order into cash is a simple process. You can walk into your chosen location with your money order and walk out with cash in a matter of minutes. Here’s how to do it.
If you have an account at a bank or credit union, you can redeem your money order there for no charge. If you don’t have a bank account, or if your bank is closed when you go to cash the money order, there are many other places to do it. Some options include convenience stores, grocery stores, and post offices.
Walk up to the desk and sign your name on the back of the money order. Don’t do this until you’re at the location and have determined that it will accept your money order. If you endorse it ahead of time and then lose it, whoever picks it up could try to cash or deposit it themselves.
When you submit your money order, you must also present an acceptable form of identification to prove you’re the intended recipient. To make sure your identification is accepted, use a government-issued photo ID. Options include a driver’s license, a passport, or a military ID.
Depending on where you cash your money order, you might have to pay a fee for the service. In most cases, this fee can simply come out of the amount of cash you receive. For instance, if you present a $500 money order and pay a $5 fee, you’ll receive $495.
Finally, the teller will take the money order and hand over your cash. Count the money before putting it in your wallet, and ask for a receipt if you didn’t get one. Make sure the cash is securely stashed away before you walk out of the store.
Most places that cash money orders charge a redemption fee, including banks where you’re not a customer. At some places, this is a flat fee of a few dollars. At others, it’s a percentage of the total amount. And some places have a tiered price structure.
For instance, Walmart’s usual fee for redeeming a MoneyGram money order is the same as its fee for check cashing. It costs $4 for a money order of up to $1,000. For money orders of $1,000 to $5,000, the fee is $8.
Still have more questions about money orders? Check out our list of common questions and answers.
The easiest way to avoid fees when you cash money orders is to take them to your bank or credit union. As long as you have an account, you pay no fees for this service.
In most cases, you can also avoid fees by taking your money order to the issuer. For instance, there’s no fee to cash a postal money order at the post office. But call the individual office first to make sure it’s able to cash money orders and doesn’t charge a fee.
Depositing a money order at your bank is just like depositing a check. You just take the money order to a bank branch, endorse it, and list the amount of the money order on a deposit slip. Then present the money order and the deposit slip at the teller window.
However, if you’re used to depositing checks into your bank account remotely using your mobile phone, you might not be able to do that with a money order. Some banks require you to hand the physical document over for processing. And if you use an online-only bank, you may not be able to deposit a money order at all.
You can if the original payee signs the money order over to you. The process is just like signing over a personal check. The payee writes their name on the back of the money order and adds “Pay to the order of” followed by your name.
At that point, the money order is effectively yours. You can cash or deposit it anywhere as if it were made out to you.
Money orders are a common tool for scammers on sites like Craigslist. These con artists use fake money orders as payment, knowing that it will take time for a bank or credit union to detect the fraud. By the time it’s discovered, they’re gone with your money or goods.
For instance, a con artist might give or send you a phony money order as payment for an item you’re selling. You deposit the money order, then ship the item. A couple of days later, the bank informs you the money order was fake and the payment didn’t go through.
Money orders also appear often in overpayment scams. The buyer sends you a fake money order for an amount that’s more than the price of your item, then asks you to pay back the extra out of your own account. Any request for a return of excess funds is a warning sign of a scam.
To prevent fraud, many issuers have added security features to their money orders. For instance, USPS money orders include a watermark and a multicolored thread woven into the paper. If you don’t see these features, you know the money order isn’t genuine.
Another thing to check when receiving a money order is the dollar amount. Some fraudsters purchase a money order for a small sum, then erase it and print over it with a larger amount. If the dollar amount on the money order looks discolored, that’s a sign of tampering.
If you’re not sure a money order you’ve received is legit, you can check by contacting the issuer. Visit the company’s website or call its listed phone number and ask it to check the serial number on the money order. They can tell you it’s valid before you hand over any goods to the buyer.
A money order can be a convenient form of payment. It’s easier to put in your pocket than a big wad of cash, and it can’t bounce like a personal check.
The main downside of accepting a money order as payment is the fee for cashing it. Fortunately, you can avoid this by depositing or cashing it at your bank or by taking it to the original issuer.
If you don’t currently have a bank account, it could be worth opening one if you receive money orders frequently. Even if you can’t find a local bank or credit union that offers free checking accounts, the amount you save on fees for cashing money orders could offset the monthly fee.