Can You Buy a Money Order with a Credit Card?

For most daily financial transactions, direct electronic bank transfers, written checks, and cash transactions dominate the field. That’s because these methods are pretty direct and quick, but they’re far from secure.

Money orders offer a much more secure alternative compared to the above payment methods, though they’re a little more difficult to get. Credit cards, for instance, are almost never accepted as payment methods for money orders, but there are exceptions when they can be. 

Let’s break down whether you can buy a money order with a credit card, how to do so, and what additional hurdles you might have to face to make it work.

What Are Money Orders?

Money orders are payment alternatives to both cash and checks. People often use money orders when they need to make secure payments but don’t want to use online payment options through a banking app or website, or through using an electronic wallet like PayPal.

Money orders are legitimate means of transferring funds and are accepted as legal tender at most locations and vendors. Money orders are also what are called “guaranteed payment” options to the recipient since they can’t bounce like checks.

Many businesses and individuals prefer money orders for this reason – they know that when they receive one, it’s backed by the indicated amount of real money.

For example, vendors for particularly sensitive items or purchases may request money orders or cash as opposed to checks to make sure they get the money on time. Money orders are also commonly requested for down payments for rental apartments or homes.

However, money orders are also a little more complex to obtain and provide for the payer, especially compared to checks and cash. 

Money orders have to be made out to specific businesses or people, just like checks, and are only cashable by the written recipient. 

Anyone trying to cash a money order must present an ID in person, which adds even more security to this payment method.

Most money orders have limits of up to $1000 or less, however, which can make money orders for large amounts of payment difficult to obtain

This is doubly true since the person paying for the money order must purchase money orders individually, meaning they may end up spending significantly more money to send funds via money orders compared to using other methods.

The funds in money orders are provided at the time of purchase. This means the individual buying the money order must have the money in the account they’re using to make the purchase or cash on hand.

Why Use a Money Order?

Even with all those complexities and caveats, there are lots of reasons why people prefer to use money orders instead of other payment methods:

  • For one, money orders are almost universally accepted. Since the money order represents real cash that was already paid, it’s “safer” than credit or checks in many cases.
  • For another, money orders don’t come with any overdraft concerns. Again, since the money order is paid for with the full amount of what it represents, the person making the payment can’t accidentally overdraft with their account.
  • Money orders can be used to send money securely over long distances since they can be paid for in one place, then mailed to a different place entirely. The recipient can then cash the order at any place that accepts legal tender.
  • People who don’t have bank accounts may prefer using money orders since you don’t need a bank account to send a money order to another person.
  • Money orders are extremely safe funds transfer tools. Whereas personal checks always include the routing and account numbers for their attached bank account (plus additional personal information like the address and full name of the people on the account), money orders don’t contain this much information and are thus safer for those concerned with identity theft.
  • Money orders allow you to send money in foreign currencies. All it requires is purchasing that money order in the foreign currency you wish to use.

Because of all these advantages, it’s important to know how you can purchase money orders if the time ever comes that you need to buy one.

Can You Buy a Money Order with a Credit Card?

In general, no. In most cases, money orders are only paid for using actual debit bank accounts or cash, as this allows the money orders to represent real currency instead of credit. 

You can purchase money orders from many common places like banks and credit unions, grocery stores, payday loan businesses, and even the post office. Military members can additionally purchase money orders at bases or other military facilities.

In addition, every money order comes with a small issuing fee. This can range from as low as $.80 all the way up to nearly $2 depending on the location.

There are only two places where you can purchase a money order using a credit card: Western Union bank locations and 7-Eleven convenience stores

This limitation is because most money order issuers want you to provide the money on hand.

Those two locations may occasionally allow you to purchase a money order with a credit card. 

But be aware that there are some strings attached:

  • Most credit card companies consider money order purchases to be cash advances. This comes with a few downsides in and of itself.
  • Cash advances usually come with higher interest compared to regular purchases.
  • Furthermore, cash advances can hurt your credit score if your credit utilization ratio is already close to 30%.

Given all these additional aspects, it’s important to read the agreements for your credit cards before buying a money order with one of them. In most cases, it’s smarter to pay for money orders using debit cards or cash if you can afford to do so.

You should also note that balance transfer credit cards are generally not accepted, as these are designed to transfer debt from one account to another versus accruing debt from purchases and cash advances. 

Downsides to Buying a Money Order with a Credit Card

  • Your credit card company may issue additional fees for cash advances. These are usually set to either $10 or 5% of the money order amount depending on which is greater. For example, a $100 money order would also incur a $10 fee.
  • The aforementioned money order also comes with a higher interest rate compared to a normal order made with cash or debit. 
  • Most credit cards do not count cash advances or money orders as regular purchases, so there isn’t any grace period. In other words, interest begins to accrue immediately. 
  • Money orders (since they count as cash advances) don’t usually qualify for any rewards, such as points to help you save money in the long run.
  • As mentioned, only two locations allow you to buy money orders with credit cards, making it more difficult than average to do so, and thus harder to rely on. 

How to Buy a Money Order with a Credit Card

If you still decide to buy a money order with a credit card, the process to do so is straightforward and almost identical to the process you’d face if you were to buy the money order with a debit card or cash.

  • For starters, you’ll need to make sure that you fill out the money order carefully and correctly. This is usually pretty simple but any errors could cause the money order to be treated as invalid.
  • You’ll need to provide some form of identification, especially when paying with a credit card.
  • You’ll need to sign the money order after filling it out. You should also get a receipt – keep this in case you want to cancel the money order or if you need to prove that you purchased it after it goes missing for whatever reason.

If you follow the process correctly, money orders purchased by credit cards do not expire and do not face any additional restrictions compared to other money orders. 

As far as the cashing institution is concerned, the money order is legitimate if it is signed and issued correctly.

This means that, even if your credit account runs into trouble later down the road, whoever you issued the money order to should still be able to cash it without any trouble.

Summary

As you can see, buying a money order with a credit card is totally possible. But it may not be the best idea for a number of reasons, including the difficulty in finding a location, higher than average fees, and potential hits to your credit score.

But when you’re out of other options, buying a money order with a credit card could be a good last choice to transfer funds in an emergency.

For all the resources you need to help you find the right credit card, check out Seek Capital today!

 

Sources

https://www.westernunion.com/us/en/money-order.html

https://www.7-eleven.com/financial-services

https://www.usps.com/shop/money-orders.htm 

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