When it comes to finances, so many people fail to understand the difference between so many different financial aspects. For example, one of the most common questions asked to bankers is the difference between a check, a money order and a cashier’s check. They all seem to be so similar that it’s often difficult for those who are attempting to distinguish the difference to do so. A money order, for example, works like a check. So why would you want to have a money order when you could just write a check? Well, there are several reasons that so many people choose to use a money order in lieu of a check, and we’re going to diffuse that confusion.
The issue with banking is that so many people are so confused with the terms. Interest rates are questionable at best, and many people are confused as to how to figure them correctly. They see notifications for cashier’s checks and money orders and they wonder how they differ from a typical check. Some people do not bank. Perhaps they owe money to a bank for overdraft fees are not permitted to open a new account until they have cleared those funds – or perhaps they have other reasons for not wanting to open a bank account.
Whatever the reason, there are some people unaware that they can purchase a money order to use in lieu of a check when the circumstances call for this. You are not required to have a bank account or be affiliated with any type of bank to buy a money order, which is what makes it a great form of payment for anyone without a bank account. Read on to find out all that you need to know about this type of payment, how it works and where you can use it.
What is a Money Order?
A money order is a certificate of monetary value. It is purchased through a financial institution or through a government office, such as a post office or other entity. This is a type of check that works almost like a check but provides instate cash to the payee. The fee for a money order differs depending on where you purchase it and sometimes how much the money order is for. Why do so many people use money orders? The answer is quite simple. It’s a simple way for those who do not have access to a typical checking account to gain access to a certified type of payment.
For example, many companies and many people accept only checks and do not accept cash for payment. One good example of this is a mortgage company. When you send your mortgage payment to the owner of your mortgage, chances are good that the company asks that you not send cash. The reason is that many people are worried that cash is easily stolen through the mail, and also because payments of this nature require that you have documentation and proof of payment.
The money order became popular in 1882, issued by American Express and used as a form of traveler check for those who needed it.
How does the Money Order Work?
The money order works much like a check. You may not fill it out and write it out and use a check that’s personal to you, but you still get to dictate the amount in which the check is written, and you get to decide to whom you want to issue the check. For example, if you choose to send a check to your mortgage company, you could have it filled out and issued to “Mortgage Company,” and then you could fill it out for the amount that it’s worth, such as $1000 or whatever your payment happens to be. After that, you have to pay a small fee to have the money order written, but it’s usually only a few dollars; though the price does change depending the amount of the order.
Money Orders are not permitted to anyone who wishes to use a check to cash them. You must pay for a money order using a credit or debit card, or cash; there are no exceptions to this rule. However, there are other exceptions to other rules. You can cancel a money order at any time, much like you would cancel a check. You can also track the payment with the receipt that comes with the money order so that it if it lost or stolen you can cancel it and then have it reissued. Additionally, it’s a great paper trail for anyone who likes to keep very careful receipts of their payments and their business practices.
That is the other thing. Money orders are permitted for use by both individuals and businesses. You can use them for almost anything, too. For example, many people close to state lines state that the vast majority of the money orders that they sell come in the form of ticket payments. When someone is in another state and is issued a speeding ticket or other form of ticket for poor driving, the state requires that ticket is paid using cleared funds.
Finally, there is another stipulation associated with money orders. They are not available for large purchases. For example, you cannot typically get one in excess of $1000, which might eliminate your ability to use to pay for something more expensive. Of course, you can get numerous money orders and pay for more expensive purchases in that manner. Let’s say you have a mortgage payment of $1500 per month and want to use a money order to pay the bill. You could purchase one for $1000 and a second money order for $500 to make this possible. It makes them slightly more expensive as you have to pay the fee a second time, but it’s always an option for anyone using this type of money order.
These are great resources for those who need them, which is why many people rely on money orders.
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