Money Order Basics: Tips for Payments
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Whether you’re buying or selling something, a money order might be your best option (or your only option) for payment. It’s considered a “safe” form of payment, making it a popular alternative to checks. But it’s important to understand the basic pros and cons of using money orders—and when other payment methods are a better choice.
What Is a Money Order?
A money order is a paper document, similar to a check, used for making payments. Money orders are prepaid, so they are only issued after a buyer pays for the money order with cash or another form of guaranteed funds.
Guaranteed Funds
Because issuers demand payment upfront, money orders are considered relatively safe, or “guaranteed,” forms of payment. They shouldn’t bounce—as personal checks might.
Specific Payee
The name of a payee (the recipient) and the name of a financial institution that issued it appear on
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