Can You Purchase a Money Order With a Credit Card?

You can purchase a money order with a credit card, but it's not the smartest or least expensive option. If you decide to use your credit card to buy a money order, you should do it knowing how it will cost you. Keep in mind that even though credit card issuers allow you to purchase money orders, your options may still be limited.

How Money Orders Work

Money orders are similar to cash, only more secure because they designate a specific payee.

Since they must be paid up front, they can’t bounce like a personal check, and are therefore a form of guaranteed payment. They also don’t splash your checking account number across the front, which makes them less prone to identity theft.

Money orders are widely available at retail stores and post offices, and usually cost less than $2.They’re a solid way to send money in the mail or pay your landlord — but only if you use cash or a debit card.

Can You Purchase a Money Order With a Credit Card?

Because they’re basically like cash, buying a money order with a credit card means your purchase will be coded as a cash advance.

So the answer is yes, some merchants may allow you to purchase a cash advance with a credit card, but it can be expensive.

Cash advance fees usually clock in at 5% or $10 — whichever is greater. So, on a $100 money order, you’d pay $10, and on a $500 money order, you’d pay $25.

That’s not all, though. Here are several other things to keep in mind when you purchase a money order with a credit card:

  • You’ll pay a higher interest rate: Most credit cards have a “cash advance APR” that’s higher than the normal purchase APR.
  • There’s no grace period: Unlike most credit card purchases, cash advances start accruing interest immediately. That means you’ll likely owe more money in fees each day after the day of the cash advance, until you’ve paid it off.
  • You won’t earn rewards: Cash advances don’t earn points, and won’t help you meet a minimum spend or snag a free vacation.
  • It might be tough to pay off: When you make the minimum payment on your credit card, your card issuer chooses where to allocate it — and it’ll probably be to your lowest-interest debt. So if you’re already carrying a regular purchase balance on a particular card, the minimum payments won’t help you pay down your cash advance (and in the meantime, it’ll accrue significant interest). Any amount paid over the minimum, however, usually goes to the highest APR — which would likely be your cash advance

How Much Does a Money Order Cost?

There’s a small fee for money orders. To give you an idea of the amount, here’s what it costs to buy a money order at the U.S. Postal Service:

  • It costs $1.25 for a money order between $.01 to $500.00.
  • It costs $1.65 for a money order between $500.01 to $1,000.00
  • It costs $0.40 for a military money order (this must be issued by a military facility)
  • The USPS will replace a lost or stolen money order, but there’s a $6.10 processing fee. Hang on to your receipt after you buy a money order just in case you need proof of the purchase or if you need to cancel it.

How Do You Cash a Money Order?

You can cash a money order the same as a check by signing the back of it and taking it to a bank, credit union or check cashing store. You can also take it to the same place it was issued from such as the Post Office, Western Union, MoneyGram, Amscot or even Walmart.

You have to endorse a money order just like you do for a check by signing the back of it and showing the proper identification. If you don't have a bank account you can try to go to the same places above or where the money order was issued.

How to Purchase a Money Order With a Credit Card

Still convinced you want to purchase a money order with a credit card? 7-Eleven and Western Union are the only major providers who will let you.

If you want to purchase a money order from other locations, including gas stations, grocery stores, convenience stores, Walmart, Moneygram, and the U.S. Postal Service, you’ll need to do things a little differently.

To use a credit card for money orders at these retailers, you’ll first need to use your card to withdraw cash from an ATM. Then you’ll use the cash to purchase a money order. Note you’ll still pay the same cash advance fees as with the other method, plus ATM fees if you use an out-of-network machine.

Do Money Orders Expire?

No, money orders do not expire. However, depending on the state you purchased the money order in and where the money order was purchased there could be a cost to cash it if you wait too long.

This can be the case if you don't cash the money order within 1-3 years of the purchase date it could get reported to the state and considered to be abandoned property or unclaimed money. The US Post Office had more than $26 million a year in uncashed money orders in 2016.

Make sure to read the conditions described on the back of the money order listing any possible service charges. Any cost charged to cash your money order will come out of the total amount of the money order.

If you know that you won't be cashing a money order for a while then you should consider purchasing your money order from the Post Office as they will never expire from there. You can also visit the place that issued the money order and ask what their rules are when it pertains to cashing an older money order.

Money orders are a fairly inexpensive alternate payment option and still popular. The US Post Office reported that over 6 million American households purchased about 100 million money orders with a face value of roughly $21 billion in 2015.

Before you purchase a money order, make sure you understand the pros and cons and choose an issuer that fits your financial needs best.

Why you might need to buy a money order

If you’ve got the cash on hand, you may wonder why a money order might be necessary. Here are a few reasons.

  • Sending money in the mail. If you need to send payment by mail, a money order offers more security than sending cash or a check. If your cash gets lost or stolen, it’s gone for good. But with a money order, you may be able to stop payment, though it may not be a simple process and will likely require additional fees. Also, money orders don’t contain sensitive financial information that can be stolen — unlike checks.
  • Sending money to another country. Money orders can make it easier to send money abroad. If the bank or credit union issuing the money order has locations in multiple countries, you could buy a money order in one country and have your recipient cash it in a different one. The U.S. Postal Service also offers international money orders for select countries.
  • It’s required. Many people don’t want to walk around with large sums of cash in their pockets. And they may not be willing to accept a personal check because they don’t want to take the chance it will bounce. In situations like these, money orders are generally a safe and trusted alternative to cash or personal checks.

Where Can You Buy a Money Order With a Credit Card?

Only two major merchants allow you to purchase a money order with a credit card: Western Union and 7-Eleven. Other money order providers, including Walmart, MoneyGram and the Postal Service, do not accept credit cards as a form of payment for money orders.

If you don't have enough cash on hand or money in your bank account to buy a money order, using a credit card is an option. But it should be a last resort because of fees and interest.

Credit card issuers like Capital One, American Express, Chase and others consider money orders a cash equivalent, which means the transaction will code as a cash advance rather than a regular purchase.

A cash advance is essentially a cash loan from your credit card's line of credit, says Maggie Germano, founder and CEO of Maggie Germano Financial Coaching. "There are extra fees that come along with getting a cash advance," she says, "(and) there also may be higher interest rates."

How to Use Money Orders

A money order is similar to a personal check in that it's a paper document the recipient can cash or deposit into his or her bank account. You can use a money order to pay rent and other bills, send money to family and friends or even pay for online orders with some retailers. There are, however, a few differences that make them a preferred payment method in certain situations, noted below.

Funds are guaranteed. When you use a personal check, the funds are guaranteed only if there's enough money in your bank account to cover them. As a result, many merchants don't accept personal checks for goods and services. Money orders require payment up front, so there's no question whether it will bounce.

No bank account is required. Roughly 9 million U.S. households don't have a bank account, according to a 2015 survey by the Federal Deposit Insurance Corp. A personal check typically requires a checking or money market account, while a money order can be purchased at the post office or retailers using other payment methods.

Your information stays safe. Personal checks show your routing and account numbers, and often also include your address, phone number and the name of other people on the account. If you don't know or trust the person who will be handling your check, a money order – which contains less personal information – may be preferable.

You can use a foreign currency. If you want to send money to another country, you can purchase a money order in a foreign currency, something that isn't possible with a personal check.

Security. A money order with a designated recipient is much safer than cash if you're mailing a payment. Lost or stolen money orders can be replaced for a fee.

No Credit Card Rewards on Money Order Purchases

If you were hoping to rack up a lot of rewards by buying money orders with your credit card, you're out of lock. Credit card issuers don't pay rewards on cash advances or cash equivalent transactions (or balance transfers) which makes your money order purchase ineligible for rewards.

Finding a Merchant Who Accepts Credit Cards for Money Orders

While credit card issuers will allow you to purchase a money order, many money order sellers do not accept credit cards as a form of payment. Western Union and 7-Eleven are currently two places that you can buy a money order with a credit card. Walmart and the United States Postal Service do not accept credit cards for money orders.

Some merchants will allow you to purchase money orders with a debit card, but only when you use a PIN. You can use your credit card to withdraw cash from the ATM and then purchase the money order, but you'll still pay the same fees.

If you're purchasing a money order to pay bills, check with the biller to see whether you can pay them directly with a credit card. You may have to pay a convenience fee, but it will likely be much less expensive than using your credit card to buy a money order.

What are the pros and cons of using a credit card to buy a money order

If you don’t have the cash on hand to buy a money order, using your credit card may seem like a simple solution. With a swipe of your card, you could have your money order in minutes. But you may also rack up cash advance fees and interest charges that may have higher rates than your other credit card debt.

“Typical APRs for cash advances … can greatly affect a user’s ability to pay off the balance of the advance — especially for those who have a history of making the minimum payment on pre-existing debts,” says Jeff Proctor, personal finance expert and co-founder of DollarSprout.com.

If you have no other option than to use your credit card, be sure to make your payments on time to avoid late fees and the negative impact that late payments may have on your credit scores. And consider making more than the minimum payment to reduce the amount you’ll pay in interest.

Why Buying a Money Order With a Credit Card Is a Bad Idea

There are many ways to pay for a money order. While you can purchase one using a credit card, doing so may not be the best idea. For starters, buying a money order with a credit card can be expensive. Your card issuer will categorize the transaction as a cash advance. That means you’ll have to pay a fee.

The interest rates tied to cash advances are usually higher than the ones tied to ordinary purchases. And interest usually kicks in immediately. So even if you pay off your cash advance right away, you’ll have to pay extra to cover the interest. In short, using a credit card to buy a money order is like borrowing money to buy cash. In most cases, it just doesn’t make sense. Moreover, if you have a rewards credit card, you won’t be able to use a money order (or a cash advance) to earn points, miles or cash back.

Even if you wanted to buy a money order with a credit card, not all places accept credit cards. The U.S. Postal Service won’t let you buy a money order with a credit card. Walmart won’t either.

Alternatives to Using Money Orders

Instead of using a credit card to buy a money order, you may want to consider using another secure payment method. That way, you’ll avoid high interest rates and fees. If you have a checking account, consider setting up automatic payments so that you can pay your bills directly from your account. You could also set up bill payments through free apps like Mint.

If your landlord won’t accept money orders or credit cards directly, you could pay rent with a credit card through a service like RentShare. You could also use a third-party like PayPal or Venmo for quick money transfers.

References:

[1] Can You Buy a Money Order With a Credit Card? https://www.creditcardinsider.com/blog/can-you-buy-a-money-order-with-a-credit-card/

[2] Buying a Money Order With a Credit Card https://www.thebalance.com/can-you-buy-a-money-order-with-a-credit-card-4152040

[3] Can You Buy a Money Order With a Credit Card? https://creditcards.usnews.com/articles/can-you-buy-a-money-order-with-a-credit-card

[4] Can you buy a money order with a credit card? https://www.creditkarma.com/credit-cards/i/money-order-credit-card/

[5] Can You Buy a Money Order with a Credit Card? https://www.experian.com/blogs/ask-experian/can-you-buy-a-money-order-with-a-credit-card/

[6] Can You Buy a Money Order With a Credit Card? https://wtop.com/news/2018/10/can-you-buy-a-money-order-with-a-credit-card/

[7] Can You Buy a Money Order With a Credit Card? https://smartasset.com/credit-cards/can-you-buy-a-money-order-with-a-credit-card