I thought money orders were the same as cash. In the last few months my bank has been putting holds on all of our deposits, made up primarily of cash and money orders. Can they hold a money order? When we questioned it, they told me it is because of money order fraud.
Not all money orders are created equal. U.S. Postal Service Postal Money Orders (Postal MOs) are supposed to be treated as near-cash items when deposited, and made available on the business day after the day of deposit. If a bank questions the validity of a purported Postal MO, it can either refuse to accept it for deposit or it can place a hold on the deposit for up to seven business days, if the bank provides you with a notice of the hold.
Bank money orders, if signed by a bank representative, should be afforded the same "next day availability" status as Postal MOs, and banks can exercise the same cautionary steps described for Postal MOs. Personal money orders (issued by a bank or private company and usually signed by the purchaser) enjoy no special status, and are treated like ordinary checks. Postal Money Orders can be verified with the Postal Service, if the bank has concerns that a given Postal MO might be counterfeit or otherwise fraudulent.
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