What is a money order?
A money order is a prepaid payment order for a specified amount. It is a more trusted method of payment than a personal check and is a safer alternative to sending cash through the mail.
Who uses money orders?
Individuals without a banking relationship who use check cashers to cash payroll checks often rely on money orders to pay monthly obligations.
Individuals who have had problems managing a checking account often use money orders to pay monthly obligations.
Why should credit unions care?
More than 30 million Americans use check cashers to conduct their primary financial transactions. Most of these same consumers are using money orders to pay their monthly obligations. To entice these users into their stores, check cashers and other alternative service providers offer cheap money orders, often as low as 50 cents each.
What can credit unions do?
Credit unions that are serious about attracting low-wealth and low-wage families should offer money orders at competitive prices. Credit unions could consider bundling money orders with a check cashing program or a payday loan product. For example ASI Federal Credit Union in Harahan, Louisiana, offers a Stretch Plan account that charges a monthly fee to members, but includes a payday loan alternative product and discounted money orders.