Paying bills by money order gets expensive

Fear of not being able to open a checking account can be fixed

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

Dear To Her Credit,
I need to get more organized with my bill paying. Every month when I get my check, I go buy money orders to pay my bills. The money orders are 75 cents each. My son pays our Section 8 rent with his disability check, and then I pay him back half of it. But I always get home and discover I've forgotten one bill, and then have to walk back to town and get another money order.

The reason I don't have a checking account is that I went through a divorce and lost my house to foreclosure a few years ago. I keep my bills either in my purse or in one of a couple of stacks at home along with coupons and other stuff. I'd like to make a budget, but I don't really know what I spend on things. I'm planning to buy a computer, but I don't have one yet. I use the Internet at the library. Can you help me? -- Susan

Answer for the expert

Dear Susan,
You're spending way too much time and money traipsing around getting money orders, and you're walking around with a month's worth of cash to do it. That's not convenient or safe. Plus, unless you religiously keep your money order receipts together and track them someplace, money orders don't help you much when you're trying to make an effective budget.

You need to re-enter the banking world and get a checking account.

Plenty of people go through divorces and foreclosures and still have checking accounts. If you've tried to open an account and have been turned down, there's some other problem. Richard Barrington, personal finance expert for, says, "The underlying problem is not because of foreclosure, but because of a specific checking account problem, like having an overdraft and then not putting in the difference."

Before you go to a bank and possibly get discouraged by being turned down, find out what is being reported about you that has kept you from getting an account. Do this by getting a free annual report from Chexsystems. Chexsystems is widely used by banks. Barrington says, "Data stays on there for five years. In terms of the reader's problem, the issue would be how far in the past that problem was." Every year that goes by, old data gets farther back in the rearview mirror.

When your report arrives in the mail, check for problems. I hope they've all passed out of view and you can apply for a regular checking account. If something shows up that is incorrect, take steps to fix it. Mistakes happen!

If your report reminds you of some unfortunate incidents, you're not alone. In fact, so many people have similar problems that some banks offer what they call "second chance" accounts specifically for people like you.

If you apply for a "second chance" account, take note:

  • These accounts do tend to be more expensive. There's a setup fee and higher monthly fees than a regular checking account. "That's understandable because the bank is taking a higher risk," says Barrington.
  • Before you sign up for an account, check with the FDIC and make sure you're depositing at a legitimate FDIC-insured institution.
  • Your goal should be to switch over to a regular account as soon as possible. You can do this just by maintaining your account in good standing for a period of time and then trying again to open a regular account.

I'd also encourage you to keep your bills in one place from now on -- a place you keep nothing but current bills. I try not to even set bills down on the table with the other mail -- they go directly in my "bills place." You'd be surprised how much trouble this one simple step can save you!

"Getting your finances in order gets easier and easier as you go along," says Barrington. Once you have a checking account and a designated place for bills, you can track your bills and spending more safely and efficiently. One step at a time, you can get your finances organized and under control.

See related: Want a better FICO score? Pay bills on time, Tips for paying bills on time

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Updated: 01-19-2019