If you are looking to pay somebody and don’t want to pay them using cash, you can use a check or a money order instead. There are differences when it comes to what they cost, where you can buy them, and when you should use one of them over the other. Let’s dive in to understand the differences.
1) You don’t need a bank account for money orders
A check requires both the payee and the recipient to have bank accounts, whereas a money order is a prepaid piece of paper that you will get in exchange for money. You can use a money order to send money to somebody or make payments. You can purchase money orders at banks, check cashing places, post offices, retail stores and more.
2) You should use a money order if the amount is less than $1,000
Money orders are perfect if you need to make a payment of less than $1,000. You need to use a check to make payments of amounts greater than $1,000. What’s more, money orders generally cost less than checks, especially cashier’s checks. For example, a money order from the U.S. Postal Service will set you back anything between $1.30 to $1.75 for money orders up to $1,000, whereas cashier’s checks will cost you around $10. Money orders are an inexpensive way to transfer money or pay bills.
3) Money orders are easier to replace if they are stolen or lost
Money orders are easier to replace than checks if they are stolen or lost. All it takes to replace a stolen or lost money order is to ask for a refund or replacement from the place where you had purchased it based on the receipt you had been issued. You may have to incur a fee to replace the money order, but you’ll get it right away. When it comes to cashier’s checks, you’ll need to request a new check from the issuing bank, and more often than will have to buy an indemnity bond from an insurance company. It may take anything between 30 to 90 days for you to get a new check.
4) A money order protects your bank information
You can use a money order if you want to protect your bank account number, routing number, and even your name. However, a check will always display your name, account number, and routing number. With financial crimes growing every year, it is always a good idea to be prudent and safeguard your bank information unless you need to share them.
5) Money orders let you pay with guaranteed funds
At times, you may not be able to make a payment using a check. For example, if you are renting a house, the landlord may ask you to pay the security deposit using guaranteed funds. Your options are to pay using a check or a money order. When it comes to checks that are guaranteed, your options are either to use a cashier’s check or a certified check, which are usually more expensive than money orders.
6) Money orders can be sent safely by mail
If you need to send somebody money by mail, you may be tempted to send cash. But, sending cash by mail is unsafe, as the envelope may get lost or stolen. However, a money order is just like a piece of paper and has a greater chance of being unnoticed by postal thieves. Moreover, money orders can be encashed by specific recipients only, so they are much safer than sending cash by mail. If the money order is misplaced, lost, or stolen by chance, you will not lose the money and can get a replacement money order using the receipt.
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