The Financial World of Money Orders

John needed to pay for an item he won on Ebay. The problem was he didn't have a checking account or a credit card. Feeling dejected, he called his friend over to his house to see if there was a better way to handle the debt besides letting the prized possession go. John's friend suggested that he should pay for the services with a money order...

Consumers, who don't have a checking account or credit card and still want to purchase items through the mail or Internet, may do so by purchasing a money order. A money order is a form stating that money is to be paid to the individual or company named on the form. These forms are great to use because they can be bought in many different places. These money orders are sold by banks, post offices, convenience and grocery stores, express companies, and telegraph offices. Let's take a look at some of these forms of money orders:

• 1. Bank Money Orders - This is a form sold by a bank stating that a specified amount of money is to be paid to the individual or business named on the form. The purchaser pays the bank the same amount of money they would ordinarily use to pay the person plus any service charge that's implied. When the money order has been paid, it will be returned back to the bank that issued it. The bank money order can be used as evidence if there need to prove that a product or service has been paid. The practices of the bank may vary when issuing money orders and should be checked.
• 2. Postal Money Orders - This form is issued by a post office that directs money to an individual or business that need to be paid. When purchasing a postal money order, the postal clerk registers the amount into a computer with figures and words. It's up to the person who's buying the money order to fill out the blank spots. These spots are as such: payee's name, your name and address, and the purpose of the money order. In most states, the largest one can issue a money order out for is $300. Fees for these money orders may vary with the amounts that are sent but these fees tend to be small.
• 3. Express Money Orders - These are issued by express companies which are businesses that engage in transporting money and goods safely. These money orders are sold by offices of the American Express Company, a few travel agencies, and some retail stores. The maximum amount one can write a money order out for is $200. The charges are about the same as postal services.
• 4. Telegraphic Money Orders - This is simply a message directing a telegraph office, such as Western Union, to pay a sum of money to a certain individual. Let's say you're traveling and run out of money just when the car decides to break down. In distress, you call a relative or close friend who may live thousands of miles away to ask them to wire you money. The person pays the amount plus a service fee to the telegraph office nearest them. This telegram is sent ordering the office nearest you to give you the amount your relative or friend sent. However, sending money this way can be very expensive. Not only will it cost to send the money but it will also cost you to receive it. This form or money order is best used during emergencies.