An Old Alternative to Checks

Approximately 17 million Americans do not have a bank account. This number includes consumers who use check cashing retailers or liquor stores to cash checks or use money orders. Many of these Americans have bad credit, little or no savings.

I used to write checks to pay my bills but after electronic check processing became available I was very uneasy using checks to pay my bills. After becoming a victim of identity theft by check in July 2009 I decided to begin paying my bills using money orders. In 2010, I switched bank to writing checks, however with the continue risks of identity theft, I am reconsidering using money orders.

Choosing to pay by money order is a personal choice because I am very uneasy with someone accessing my checking account electronically. This can increase errors made on your account and increase your chances of being a victim of identity theft.

On average I would spend $4.40 on for postage for checks written per month. If I purchase ten money orders I would spend $4.40 per month in postage plus the cost of each money order is $.39 so it would cost me $8.30 ($4.40 + $3.90) to pay 10 bills each month. Using money orders have advantages and disadvantages:

Advantages

1. This is the best option if you do not have a bank account.

2. If you have a checking account your bank may allow you to purchase a money order for free.

3. Reduces my chances of becoming a victim of identity theft by limiting exposure to your checking account.

4. Provides security protections such as the Ben Franklin images on the left side and the amount of the money order listed in two locations.

5. Helps to save money by using money orders if you frequently get charged overdraft fees on your checking account.

6. Will become more disciplined in your spending because you will limit your use of your credit card, check card or debit card.

Disadvantages

1. Purchasing a money order has limits in some cases up to $1,000 depending on the issuer. To get money order for larger amounts may require purchasing multiple money orders.

2. Increases the time to process your payment if mailed out of state which can take anywhere from 2-15 business days.

3. If you lose your cash your bank will not replace it.

4. You may incur more expenses by using money orders.

5. Limits your transactions and is usually used for paying bills, most retailers will not accept a money order for payment.

6. You cannot make payments by phone.