Money orders are a good alternative to paying by check for consumers who don't have a bank account. In most cases, buying a few money orders each month costs no more than maintaining a checking account, but many people never look for the best deal on money orders so they end up over-paying or being surprised by hidden fees.
The easiest way to compare fees is to look at the basic fee for a money order of up to $500. You shouldn't pay extra fees beyond the basic charge; expect to pay around one dollar per money order. If you buy multiple money orders each month, it pays to compare prices because so many places sell money orders, you shouldn't have to drive all over town to find a good price.
While banks charge less for money orders than they do for cashier's checks, banks are often your most expensive option. You can buy money orders at check cashing stores but make sure you know the cost before requesting a money order. Most supermarkets, Wal-Mart stores, and Western Union locations sell money orders. The post office also has affordable money orders.
One fee that often surprises consumers is that many places charge to trace a money order. All money orders have a number that you can use to track the money order but some money orders are easier to trace than others. Expect to pay a fee for tracking the money order; the fee will vary depending on where you bought the money order.
You can cash a money order at your bank or deposit it into your account. If you don't have a bank account, cash the money order with the issuer without paying a fee. For example, you can cash a postal money order at any post office with a picture ID. Make cashing a money order at a check-cashing store your last resort since they usually charge a hefty fee. Bank tellers generally can spot a fake money order, but if you receive a counterfeit money order and unknowingly cash it, be aware that you are responsible for returning the money to whoever cashed it for you.
If you find a good deal on money orders sold in a convenient place, you will never have to buy expensive checks from your bank again, nor will you ever have to worry about bounced check fees.
