Can You Buy a Money Order With a Credit Card?

FT Contributor
Can You Buy Money Orders With A Credit Card?

There are many reasons why you might need money to make a secure payment, even, or especially, nowadays. For example, money orders are a safer option than cash or checks if you’re mailing money. They work much in the same way as personal checks do in that the only person who can use it is the person you write it out to. 

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What is a Money Order?

A money order is an alternative option to checks or cash for making a secured payment. Money orders are a form of guaranteed payment because you do pay for it upfront.

However, unlike checks, your checking account number is not printed on the money order, keeping your finances safe from fraudsters and identity theft. Money orders can also be a good option for people who need funds after banks are closed, as many grocery stores offer money-order services after banking hours. 

You can pay for a money order in several different ways, including cash, check, and even your credit card. Unlike cash or check, paying for a money order with a credit card may have some drawbacks, so it’s important to understand the process beforehand. 

What Are Money Orders Used For?

Money orders can be used for several things, but some of the most common uses include: 

  • Paying rent;
  • Paying utilities;
  • Sending funds by mail;
  • Paying government fees, like taxes;
  • Paying tuition.

What you use a money order for will be determined by the amount of money you need, how much you can get in a single money order, as well as the institution you’re paying. 

Should You Buy a Money Order With a Credit Card?

While the option is available to purchase a money order with a credit card, there may be some drawbacks. Many card issuers treat money order purchases as a cash advance. 

This could make your money order purchase more expensive in the long run, as many cash advance transactions have higher interest rates, no grace period, and may include fees. The terms of your credit card agreement will be a huge factor in determining whether purchasing your money order with your credit card is a good idea.

Taking out a cash advance on your credit card can also affect credit utilization ratio, which directly affects your credit score. Additionally, credit card rewards often don’t apply to money order purchases, so there aren’t any intrinsic benefits to purchasing a money order with your credit card over cash or a check. 

You’ll also want to make sure that your cash advance limit is high enough for the purchase of the money order, as it’s common for people to purchase money orders for larger amounts.

Where You Can Purchase Money Orders Using a Credit Card

There are plenty of establishments that offer money orders, but very few that will accept credit cards for money orders. The two more well-known locations that accept credit cards are Western Union and 7-Eleven.

Both establishments will charge separate fees from any credit card fees that may be applied to this purchase. It will cost you close to $12 for money orders that amount to $100 if you go with Western Union. 

If you choose to go with 7-Eleven, it will cost between $1 to $5 depending on how much the money order is. Typically, higher amounts have lesser fees. 

To get around the lack of locations, you can withdraw cash from your credit card at an ATM to purchase a money order with your credit card. With cash, your selection of establishments to purchase a money order expands to include: 

  • Walmart with a maximum fee of 88 cents;
  • USPS with a cost of $1.20 for money orders up to $500 and a $1.60 fee for orders up to $1,000;
  • Banks with a fee of $5 for money orders less than $1,000;
  • Credit unions where fees will vary from branch to branch. 

Cash may be preferable if you need to purchase a money order after typical working hours when many grocery stores that offer money order services are open. 

Alternatives to Buying a Money Order  

If you are unable to acquire a money order through your credit card, there are many other viable options that are left for you to explore that can serve a similar purpose to a money order.  

Cashier’s Checks

A cashier’s check functions similarly to a money order, however, it is written in the bank’s name and not yours. Because of this, fees for cashier’s checks are typically higher. The average fee of a cashier’s check is about $10, on top of however much you’re purchasing the check for. This is another safe way to send money through the mail, as it doesn’t have any of your bank account details on it. 

Wire Transfers

A wire transfer is the electronic transfer of money from one account to another. Many banks offer free transfers to other accounts at their bank, even if the recipient is at a different branch. 

Wire transfers are also possible between different banks, but fees may apply. When doing a wire transfer, the recipient will need to give you their banking details and have a bank account in order to receive these funds, which may not be possible in all scenarios. 

Automatic Payments

Automatic payments for things like rent and utilities, and even things like student loans or mortgages, are becoming more and more common. 

You can set up automatic payments with your credit card. They’re a good alternative to money orders, as these payments won’t be treated like cash advances. However, you’ll still want to be mindful of how automatic payments will increase your credit utilization ratio, and affect your credit score. 

Even though you can buy money orders with credit cards, this option should not be chosen lightly. If you can even find a business that accepts credit cards for money orders, multiple fees and high interest rates can make this purchase more expensive by the minute.

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