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Updated on Thursday, March 4, 2021
It’s likely that many people only think of the United States Postal Service (USPS) as a mailing system. But in reality, the USPS also offers money orders and wire transfers, making these services accessible at a nonbank institution for those who cannot, or prefer not to, use traditional banks.
In fact, the post office once had its own banking system — and it just might make a comeback in the near future. Learn more about the financial services that the USPS offers and its banking past and future, as well as other banking alternatives that can come in handy for consumers everywhere.
- USPS banking services
- USPS vs. banks and credit unions
- USPS banking services: Past and present
- Alternative banking services to consider aside from USPS
USPS banking services
Currently, the U.S. Postal Service offers money orders and wire transfers, both domestic and international.
USPS money orders
You can buy a money order (a check-like, certified form of payment) at any USPS location. Money orders can be purchased up to $1,000 per order for domestic money orders and up to $700 per order for international money orders.
Fees for domestic USPS money order will depend on the amount you send, while postal military and international money orders carry their own distinct fees:
|USPS Money Order Fees|
|Domestic money order up to $500||$1.30|
|Domestic money order between $500 to $1,000||$1.75|
|Postal military money order||$0.45|
|International money order||
You may pay for a money order with cash, a debit card or a traveler’s check; credit cards are not accepted. Once purchased, the USPS will provide a money order tracking tool that you can use to check on the status of your money order.
You can also cash domestic USPS money orders at no cost at any post office location.
USPS international wire transfers
The USPS also allows you to send international wire transfers, which are secure online payments. The wire transfer system, called Sure Money, lets you to send up to $1,500 per day to the following participating countries:
- Dominican Republic
- El Salvador
Sending money through Sure Money requires an acceptable primary ID with a clear photo.
You’ll pay a fee for Sure Money wire transfers, as well as USPS fees if you decide to ask for a refund or change the intended recipient.
|USPS Sure Money Fees|
|Transfers up to $750||$14.85|
|Transfers between $750 to $1,500||$21.50|
|Change of recipient||$17.35|
Even with fees, Sure Money wire transfers are generally cheaper than what many banks charge for an international wire transfer. For instance, Bank of America charges a fee of $45 for wire transfers sent in U.S. dollars, or $0 when sent in foreign currency. Fees at Citibank range from $10 to $35, while TD Bank charges $50.
Depending on the amount you’re sending and your method of payment, however, other remittance services like TransferWise or Xoom may charge lower fees than even the USPS — and some may not charge a fee at all.
USPS banking services: Past and present
The history of USPS banking services
Utilizing the post office as a banking resource isn’t a revolutionary idea. In fact, from 1911 to 1967, the Postal Savings System held as much as $3.4 billion on deposit. This system was established by Congress in 1910 to encourage people to put their money into circulation, attract deposits from immigrants, provide a safe depository for people who didn’t trust banks and serve as a convenient option for working people.
The Postal Savings System included only savings accounts, which paid 2.00% APY — a very attractive savings interest rate today — and you could open an account with a deposit of $1 to $500.
The future of USPS banking
Due to the prevalence of banking deserts and the fact that millions of Americans are unbanked or underbanked, several politicians have proposed the return of a post office bank. Here’s a look at how the conversation around bringing back USPS banking has evolved in recent years:
April 2018: Sen. Kirsten Gillibrand (D-N.Y.) introduced legislation that would allow the post office to offer low-cost, low-amount loans, remittance services and checking and savings accounts with debit cards.
May 2019: Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) pointed to postal banking as a safer alternative to predatory lending and high interest rates in their Loan Shark Prevention Act. They suggested ATMs, check cashing and bill payment as natural extensions of the post offices services.
June 2019: On a wider scale, an amendment to the Fiscal Year 2021 House Financial Services and General Government Appropriations (FSGG) bill to begin the funding of a postal banking system passed in the U.S. House of Representatives in June 2019. The bill was notable for its bipartisan co-sponsorship.
July 2019: During her presidential campaign, Sen. Elizabeth Warren (D-Mass.) advocated for postal banking, noting that extensions of postal banking services are already within the legal scope of the USPS and all that’s really needed to get postal banking off the ground again is officials who are committed to making it work.
July 2020: Another FSGG amendment passed in the House in the summer of 2020 that would allocate $2 million to the USPS for postal banking pilot programs throughout the country. In order to become law, however, the bill must pass the House and the Senate, then get signed off by the President.
How the USPS could fill banking desert gaps in the U.S.
Over 31 million U.S. households lack adequate banking services, according to data from the Federal Deposit Insurance Corporation (FDIC), whether they were unbanked or underbanked. However, data also suggests that many households may have greater access to post office locations than they do bank branches.
Places with limited — or no — access to banking services are known as banking deserts. DepositAccounts found that over 7.4 million U.S. adults live in such deserts across 673 U.S. counties, where they have better access to post office locations than bank or credit union branches, where there are often no banks or credit unions at all.
What’s more, many of these counties are located in rural areas, which likely make it more difficult to travel to the next county over just to access your money.
The DepositAccounts study also looked at data by zip code, providing a closer look at smaller geographic areas. This analysis revealed that 32.2% of U.S. zip codes have more post offices than bank branches or credit unions, while another 16.3% have no post offices, banks or credit unions.
Given the USPS’s greater presence in these areas, the addition of USPS banking services could provide additional access to those in America who are unbanked or underbanked, or at least mitigate the need to travel far distances just to get banking done.
Other alternative banking services to consider
Until postal banking makes its triumphant return, folks in banking deserts will have to make do with the services already available. While the USPS is an option for money orders and transfers, consumers have other alternative banking possibilities as well:
- Online banks: Not only do online-only banks eliminate the need to go to a branch to complete your transactions, many of the best checking accounts are now online. Online accounts tend to have low to no fees, as well as higher interest rates. These accounts often include a mobile app, making it easy to access your money from home and on the go. Switching to an online bank doesn’t mean you have to forgo all physical access to your cash either, as online banks typically partner with nationwide or even worldwide ATM networks.
- Cash management accounts: Cash management accounts are the outcome of the union between the financial and tech sectors, and as a result they are also easily accessible online and through mobile apps. Fintech startups seek to improve upon the traditional banking experience by offering online accounts that have very few fees (if any), high deposit rates and an arsenal of budgeting and saving tools. While not technically bank checking accounts, cash management accounts are still typically FDIC-insured by the fintech’s partner bank(s).
- Local credit unions: Credit union membership is often based on your geographic location or membership within a group or organization, so banking with your local credit union can be a good way to ensure your financial institution has a physical location within reach. As an added bonus, credit unions can be a good way to stay involved with and connect with your community. Due to their structure, credit unions also tend to reward members with lower costs and higher interest rates as well.