You can buy a money order with a credit card, but that would usually be viewed as cash advances, which are likely to carry high interest rates and fees. Let’s explore how money orders work and why you might need to buy it with a credit card.
You can pay for money orders in a variety of ways, but the real question is: can you buy a money order with a credit card? Although the answer is yes, it may be treated as a cash advance, leaving you to wonder if this option is truly worth it.
There are many reasons why you may need a money order in this day and age. Even now, not all establishments accept personal checks or credit cards, requiring cash you may not have upfront.
This becomes especially worrisome when you cannot pay your utilities or rent with these forms of payment either.
However, 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.
What is a Money Order?
A money order is a guaranteed payment for a specific dollar amount that can be used to pay bills or send money to specific people. You can use money orders just like cash.
But unlike cash, you’ll receive a receipt that allows you to track your funds or report your money order lost or stolen.
In general, money orders are limited to less than $1,000. If you need more than that, you’ll typically need to buy multiple money orders or choose a different form of payment.
Can You Buy 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 buy 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
- Also, 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.
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.”
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.
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.
Although it’s possible to buy a money order with a credit card, it’s almost never a good idea because of the extra fees and interest charges you’ll accrue.
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