A money order is a safe and convenient way to pay bills or send money to someone else. You buy a money order from a place that sells them, turning over your cash for a small, printed document that looks a bit like a bank check. The amount of the money order appears on the face, as does the issuer. When you add a payee's name to the money order, that payee can then deposit it and, if needed, credit you with the payment.
Money orders are safer than cash, but they don't last forever – after several years, they may no longer be redeemable.
Why a Money Order?
Sending cash through the mail is dangerous, but not everybody has a checking account or a bank account available for automatic withdrawals. One alternative is to pay your bills with a money order. For a small fee, you can buy one at the post office, at a bank or at stores that offer Western Union services. Money orders also offer a convenient way to send money to another individual. Some money orders do have an expiration date, however.
The financial services company, Western Union, says its money orders never expire. However, some states do allow the company to charge a service fee for redeeming a money order from one to three years after you buy one. This means the company or person to whom you send the money order would not be able to cash it for the full amount. If you're facing this problem, you can request a refund of the remaining balance from Western Union, a service the company says is free. Fidelity Express, a smaller company that also offers money orders, sets a limit of two years before a service fee is charged, and will charge up to $2.00 a month dating from the time of original purchase.
USPS Money Orders
One of the biggest issuers of money orders is the United States Postal Service. USPS money orders never expire. If you lose one or have your money order stolen, however, you would only be able to replace it by returning to the post office with the purchase receipt. The USPS will provide a copy of a money order up to two years after it issues one. They limit money orders to $1,000 for payees within the U.S. and accept cash, traveler's checks or a debit card for payment.
Bank Money Orders
If a bank or agency issues a money order that is never cashed, it has a small accounting problem – cash or other assets received for a payment that was never claimed. After a period of time, the issuer may classify the cash as abandoned property and report it to the state agency responsible for tracking these assets and returning them to the proper claimant. The USPS alone, according to UnclaimedAssets.com, has more than $25 million a year in uncashed money orders. If you find an old money order, the best course of action is to visit the issuing bank or other agency, and ask what their policy is and whether the money order is still negotiable.