How Do Money Orders Work? A Step-by-Step Guide

A money order is a prepaid form of payment that works similarly to a check. Because you’ve paid for the money order before it's issued, the funds are guaranteed to the one receiving it.

Money orders are often used by those who don’t have a bank account, want an alternative to using personal checks and want funds up to $1,000. Here’s a step-by-step guide to buying and understanding how money orders work.

Key Takeaways

• Prepaid and guaranteed: A money order works like a prepaid check — you pay the full amount plus a fee upfront, so the funds are considered good, up to a $1,000 cap per order.

• Where to buy and what it costs: The post office charges $2.65 for orders up to $500 and $3.75 for $500.01 to $1,000, Walmart through Western Union costs $1 or less and banks or credit unions charge up to about $5.

• Pay with cash or debit, not credit: Most sellers accept only cash or a debit card, and using a credit card is typically treated as a cash advance with its own fee, a higher APR and no grace period.

• Fill it out completely: Enter the recipient's name, add your name and address, note the reason in the memo line, sign the front and keep the receipt with its tracking number.

• Cashing is free at the issuer: Bring a government-issued ID, endorse the money order and cash it at the issuing institution to avoid a check-cashing fee.

• Know the alternatives: A cashier's check runs about $10 to $15 and suits larger payments, a domestic wire runs about $25 to $40 for speed and Zelle moves money in minutes for people who both have accounts.

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How Does a Money Order Work?

Money orders are purchased upfront, which makes the funds guaranteed. That's why you typically can’t purchase one with a credit card, and most issuers won't accept one. You would typically pay with cash or a debit card. Here’s how getting a money order works:

1. Buy your money order at a bank, a retailer or the post office.

2. Fill out the money order with recipient name and sign it.

3. Money orders can be issued for up to $1,000.

4. Send or deliver the money order in person.

5. Recipient cashes or deposits it.

How To Buy and Fill Out a Money Order

It’s a straightforward process to buy and fill out a money order. Here's how:

1. Decide the amount of your money order.

2. Pick a bank, retailer or post office to buy your money order.

3. Bring cash or a debit card — credit cards aren’t typically accepted.

4. Enter the recipient’s name and the memo line.

5. Pay the face value plus the fee to purchase the money order

6. Keep your receipt.

How To Cash a Money Order

In order to cash your money order, you’ll need to follow these steps:

1. Bring government-issued ID, such as a driver’s license, passport, etc.

2. Endorse the money order

3. Cash the money order at the issuing institution to avoid a fee

If you suspect your money order is counterfeit, here are some ways to help you easily identify when it's fake.

How To Spot a Fake Money Order

Here are some fake money order red flags:

1. No watermark or security thread

2. Smudged or blurry printing

3. The amount doesn’t match the number and written totals

4. A request to wire back any overpayment

Once you've verified that your money order isn't legitimate, it's best to next decide whether or not a money order is the best payment option for your situation.

Money Order vs. Cashier's Check vs. Digital Payments

Not every payment option makes sense in every transaction. You’ll need to evaluate how much money you’re sending, whether you or the other party has a bank account or if the recipient prefers a digital transfer.

Here’s each method and when it makes sense to use one of these payment options:

When To Use a Money Order, Cashier's Check and Digital Payments

• Money order: Use a money order when you don’t have a bank account and the recipient wants guaranteed payment without having to use a bank, such as a landlord wanting rent.

• Cashier's check: Use a cashier;s check when the sender and recipient have bank accounts and you’re paying a large amount, such as buying a car.

• Digital transfer: Use a digital transfer when you need funds to be delivered faster — for example, paying a friend for concert tickets

FAQ

Can you buy a money order with a credit card?

You typically can’t buy a money order with a credit card because it must be fully paid for upfront. Also, most issuers won’t accept credit cards. You can technically use a credit card, but it would be treated as a cash advance. That may end up being more costly for you, since you can be charged a cash advance fee, which tends to have high APRs and no grace period, so interest begins accruing immediately. The standard payment methods include cash or debit card.

Do money orders expire?

USPS-issued money orders don’t expire. However, some issuers may charge fees if the money order hasn't been cashed after some time has passed.

Is there a daily or monthly limit on how many money orders I can buy?

There isn't a limit to the amount of money orders you can buy. However, the maximum limit that most issuers cap it as at $1,000 per money order. If you'd like to purchase more than that amount, some may require identification.

What happens if a money order isn't signed?

An unsigned money order won’t be cashed or deposited. It’s considered incomplete without a signature.

Can a money order be canceled after it's already been cashed?

A money order can’t be canceled after it’s already been cashed.

Key Terms

• Money order: A prepaid payment instrument bought for a set amount plus a fee that functions like a guaranteed check, capped at $1,000 per order for U.S. postal money orders.

• Purchaser: The person who buys and pays for the money order and signs the front. Also called the sender or payer.

• Payee: The person or business named on the money order as the recipient — the only party who can cash or deposit it.

• Endorsement: The signature the payee adds to the back of the money order to cash or deposit it.

• Cash advance: Borrowing cash against a credit card's limit. Buying a money order with a credit card is usually processed this way, triggering a fee, a higher APR and immediate interest.

• Cashier's check: A check drawn on and guaranteed by a bank, typically costing about $10 to $15, used for larger guaranteed payments and requiring a bank account.

• Wire transfer: An electronic bank-to-bank transfer, typically about $25 to $40 domestically, used for large, fast payments.

Sources

• USPS. Sending Money Orders.

• USPS. Money Orders: The Basics (FAQ).

Summary generated by AI, verified by MoneyLion editors

Information on money order fees is accurate as of July 29, 2026, and subject to change.

Photo credit: Dima Berlin/iStock