Money Orders in New Jersey
Make transactions convenient with money orders
Money orders are official documents representing a specific monetary value, similarly to written checks. However, money orders are different from other forms of payment in a few different ways, which you can read about below. What's important to know up front is that money orders are prepaid, so you must be able to pay for the full amount you want to include in your money order when you go to purchase it. For example, if you want to send a $100 money order to a family member, you need to be able to pay $100 up front in order to create the money order. Money orders aren't a form of credit and don't require a credit score, and you don't even need a bank account to pay for one. This makes money orders an accessible form of payment for people in a wide variety of financial situations.
In addition to paying up front, you'll need to list a payee. The payee is the person or organization that you want to send the money to. Once the money order is created, you can mail or physically hand it to the payee. The money order must bear the signature of the payer (you, if you're the one sending it) and the payee in order to be valid. You'll want to hang on to any documentation relating to the money order, such as a pay stub and/or receipt, until you're sure the payee has signed and cashed the money order.
When should I use a money order?
Money orders are great to use in situations where other forms of payment are either unavailable or unsafe. The nature of a money order essentially makes it as good as cash, which might make it reassuring if you're skeptical of whether someone who's paying you with a money order is able to settle a debt. You can use money orders to pay off personal debts to other individuals, pay bills to companies or send gifts. There are no formal legal restrictions on what you can use money orders for in the US. However, money orders may not be valid internationally. If your payee is located outside of the US, make sure to check on whether they'll be able to cash it in their country. Find this out up front before you purchase. You may be able to cash your own money order if you can't actually use it for its intended purpose, but you may not want to take this risk or deal with the hassle.
Why should I use a money order instead of another form of payment?
There are some distinct advantages to using money orders, but there are also some drawbacks. Consider these other forms of payment as options in addition to money orders before purchasing. Though money orders protect against some types of fraud, they aren't fraud proof. Money order scams are relatively common, so consider your payment method carefully, particularly if you don't know the payee.
- Money order vs. check: Money orders have a few advantages over checks, including the fact that paying up front means you won't be surprised by a cashed check and a drop in your bank balance later if the recipient waits to cash it. This can be preferable for people who generally have lower bank balances that might overdraw. Money orders also don't carry any of your bank account information, which is best if you're worried about checks getting stolen or otherwise falling into the wrong hands. One advantage of checks over money orders is that you can't cancel a money order if you suspect fraud. Once you've purchased the money order, that money is essentially out of your hands.
- Money order vs. cash: Because money orders are made out to a particular person as the payee, it's difficult for a third party to steal your money. It's never a good idea to mail cash, either, so money orders can be a better alternative if you need to send funds to someone who doesn't live nearby or whom you don't want to see in person. Cash may be preferable for some payees because it's easier to deal with than a money order. Once you hand over the cash, the payment is made without the need for additional steps. However, for the payer, money orders are generally more secure.
- Money order vs. debit: As with checks, debit cards may be less preferable to money orders because they can cause you to overdraw your bank account. Debit is also less fraud-resistant than a money order. However, if you need to pay electronically, debit is the better choice.