A personal money order is a prepaid financial document that is signed and given to a recipient by an individual. Money orders are issued for a specified amount of money, and a personal one might be purchased at a post office or grocery store customer service counter. They are somewhat like a single-use bank checking account because the person who purchases the money order has control over the money and may place a stop payment on it if it is lost or stolen. Money orders usually cost a small fee on top of the value of the document.
Essentially, a personal money order is like a certified check, but it has a limit on how much it can be worth. This differs from a personal check because the money is already pre-paid and held for payment, so it is a more reliable means of accepting non-cash payments. Value caps are set by the financial organization that issues the money order. If a person needs more than a money order will cover, he can purchase more than one.
A bank money order is a different instrument, and it is purchased by a person but issued and often delivered to the recipient by a banking organization. They are more frequently used for international transactions because they can be purchased in the recipient’s currency for easy transfer. Normally, personal money orders are issued in the currency handled by the store where the money order was purchased.
Usually, when a person buys a money order, he must fill in information about the recipient on his own. In addition to the purchaser’s supplied information, it may also list the money order issuing organization and the amount. Using one can be good for situations in which the purchaser of the money order wishes to remain anonymous, like for gift or charity purposes. For anonymity, the person buying it can leave his information blank.
Most personal money order issuers recommend that the buyer fill out the recipient information before leaving the purchasing location. A money order with a blank recipient can easily be redeemed like cash, and a stop payment may be too slow to prevent it from being cashed. Some buyers choose not to fill out recipient information because they want to keep the information private or are purchasing the money order for someone else to use.