A money order is a tradable instrument. It is a promise to pay a certain amount of money to a specific person. A payor (or drawer) sends money to a payee. To complete the document correctly, the purchaser of a money order must follow some specific steps. The procedures ensure that the payment is made to the correct party.
Part 1 Using A Negotiable Instrument
1. Look for a company that offers money orders. Money orders are issued by most banks to their account holders. They may also sell money orders to non-account holders who want to pay in cash.
If you buy a money order from a bank and do not have an account there, they will almost certainly charge you a high fee.
Money orders are available from the United States Postal Service (USPS). A money order form can be obtained by visiting a post office branch.
MoneyGram and Western Union are two additional companies that offer money orders. Locations can be found online. In some cases, your local grocery store will allow you to place money orders through these two companies.
2. Send a negotiable instrument. You are transferring a negotiable instrument when you complete a money order and give it to the payee. In this context, the term “negotiable” refers to “transferable.”
There is a line on your money order that says “pay to the order of.” That language is the same as what you’d see on a check. The phrase “pay to” on your money order means the same thing.
Consideration is an important term in the context of negotiable instruments. If each party considers the other, each party is relying on the other. For example, you could buy a money order to pay for a product or service. In that case, you’re paying a fee and expecting something in return. Both parties (payor and payee) are offering consideration.
Part 2 Filling Out A Money Order
1. Fill in the blanks on your money order. Fill in the “pay to” or “pay to the order of” line with the recipient’s name. Look for the section of the money order that requests information from the purchaser or drawer. As the payor, include your name and address. The payor is also the purchaser or drawer.
Fill in the name of the person you are paying right away when you purchase the money order. If you misplace the money order, someone else can fill in their name as the payee and cash it.
You may also be asked to enter the recipient’s address in the “pay to” section.
Fill out the money order’s receipt section. Remove it and keep it for your records. Some money orders include a carbon copy in addition to the original. Other money orders include a portion of the original form that you can tear off and keep.
2. Sign the original money order and keep a copy for yourself. Locate the section of the money order that requires the payor’s signature. Your signature authorises the financial institution to pay the funds from your money order to the payee.
The payor is also known as the purchaser or drawer. Look for any of these three terms in the money order’s required signature section.
A tracking number will be included with the money order. You should be able to track the status of your money order using the financial institution’s website or toll-free number. You should get confirmation when the money order is cashed.
If the payee misplaces the money order, you can cancel the payment and replace it using the tracking number. To replace the lost money order, you must pay a fee.
3. If you make out the money order to the wrong person, return it and exchange it for a new one. If you make any other mistakes when filling out the money order, return it to the financial institution. You have the option of replacing the money order or requesting a refund. You may be charged a fee for these services.
When filling out money orders, always use a pen. The information is more difficult to change when written with a pen.
Make sure you budget for the cost of the money order.
Don’t throw away the money order; instead, treat it like cash. The process of cancelling or replacing a money order is complicated and costly.
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