Do Banks Charge for Money Orders? And How Much?
Navigate the costs of bank money orders and uncover convenient options for obtaining this secure financial instrument.
Money orders offer a reliable method for making payments when cash or personal checks are not suitable. They are a secure financial instrument, with funds guaranteed because they are prepaid. This makes them a practical choice for individuals without a traditional bank account or those seeking an alternative for security reasons.
What is a Money Order
A money order functions as a guaranteed payment instrument, similar to a certified check. It is a paper document purchased for a specific amount, which the recipient can then cash or deposit. Since the full amount is paid upfront, a money order cannot be returned due to insufficient funds, providing assurance to the payee.
Money orders are used for transactions like paying bills, sending rent, or securely transferring funds without revealing bank account details. Key features include a fixed value, space for payee information, and a serial number that allows for tracking the payment’s status. This prepaid nature and traceability enhance their security compared to mailing cash.
Bank Charges for Money Orders
Banks impose fees for issuing money orders. The cost varies depending on the financial institution, account holder status, and sometimes the money order amount. Many large banks charge a flat fee, around $5 for each money order issued, with a maximum value of $1,000. Some premium account types may offer money orders at a reduced cost or free.
Banks commonly restrict money order purchases to existing account holders. To send a larger sum, individuals must purchase multiple money orders, incurring a fee for each. Consumers should verify the current fee schedule with their bank, as charges and policies can differ.
Where to Obtain Money Orders Beyond Banks
Consumers have options for purchasing money orders outside of traditional banks, with varying fees and limits. The U.S. Post Office offers domestic money orders up to $1,000. For amounts up to $500, the fee is around $2.35, while money orders between $500.01 and $1,000 cost about $3.40.
Major retailers, such as Walmart, also sell money orders, often at a lower cost than banks. Walmart money orders have a maximum fee of $1, often costing less than a dollar, and are limited to $1,000. Money transfer services like Western Union and MoneyGram also provide money orders. Their fees range from approximately $0.50 to $1.50 or more, varying by location and amount, with a limit of $1,000 per order. These alternative locations offer access, particularly for those without bank accounts or seeking lower fees.