Can You Pay For A Money Order With a Credit Card

Can You Pay For A Money Order With a Credit Card?

If you need to send money or make a payment, a money order may be a better option than a personal check or cash. You can usually purchase one with cash, a bank transfer, or a debit card.

However, you may be wondering, “Can You Pay For A Money Order With a Credit Card? ” Yes, technically. However, it is possible that it will be more trouble than it is worth.

If you need to send money to someone, a money order is one option. A money order is similar to a check in that you pay for it in advance, but the funds are guaranteed. You make your money order payable to a specific person or business, and they cash it just like a normal bank check.

Some people use money orders because they do not have a traditional checking account. Others buy money orders because they need to make a payment to someone who will not accept a traditional check. Although money orders are less common these days, owing in part to an increase in money order scams, people continue to send and receive money orders through banks, the United States Postal Service, services such as Western Union and Moneygram, and retailers such as Walmart and 7-Eleven.

Most issuers only accept cash for money orders, so if you want to use your credit card to buy one, you’ll need to get a cash advance, which can cost you a lot of money in fees and interest charges, especially if you can’t pay off your credit card amount immediately. Here’s what you should know before using a credit card to buy a money order. But before that, let’s take a brief intro about what money order is.

What Is a Money Order?

When you need to make a secure payment and are unable or unwilling to use your bank’s online payment options or an online payment app like Venmo or PayPal, a money order is an alternative to checks or cash.

A money order must be paid in advance. Unlike a check, which can bounce, this makes it a guaranteed payment to the recipient, which is why some people and businesses prefer to use them. Money orders must be made out to a specific person or business and can only be cashed by that person or business. Because cashing a money order necessitates presenting identification in person, you don’t have to worry about a thief gaining access to your funds.

Money orders typically have a $1,000 limit, though some issuers have lower limits. If the amount you need to send is greater, you’ll need to purchase more money orders. For example, if you wanted to buy $3,000 in money orders from a location where money orders are limited to $500 each, you’d have to buy six money orders. There may also be restrictions on the total dollar value of money orders you can purchase in a single day. For example, the United States Postal Service limits you to $10,000 in money orders per day.

Money Orders: Pros and Cons

Money orders have several advantages, including traceability, with a receipt that typically includes the date of purchase, dollar amount, and banking code. When money orders are stolen or lost, the merchant or bank will sometimes replace them. Money orders can be used to send money quickly to a friend or family member, either locally or internationally. People who do not have a checking account can still purchase a money order to send money to another person.

Keep in mind that money orders normally have a limit on the amount that can be purchased. For example, if a retailer’s money order has a $1,000 value limit, and the buyer wants to transfer $3,000 to a family member, they will almost certainly need to buy three different money orders. Most stores or merchants levy a small fee for each money order purchased.

What’s the difference between a money order, a personal check, and a cashier’s check?

Are you unsure which payment method is best for you? Let’s look at three alternative possibilities.

  • Money orders: Money orders are essentially the same as cash. Because they’re prepaid, they’re less likely to bounce than personal checks. Money orders are a fantastic option for paying modest bills (such as utilities or cable), making little purchases under $1,000, and sending money to relatives and friends because they’re often capped at $1,000.
  • Personal Checks: Personal checks, unlike money orders, are not pre-paid. When you write a check, you’re agreeing to pay a specific amount of money to an individual or business. When the recipient cashes or deposits the check, money is taken from your bank account. If you don’t have enough money in your account to cover the check’s amount, it won’t be processed, and the recipient won’t be paid, which could result in you paying additional costs. Furthermore, passing a bad check is against the law, so make sure you’re not writing a check knowing you won’t be able to cover it. Checks don’t have a dollar limit, so they can be used for larger purchases and situations where guaranteed payment isn’t required.

  • Cashier’s check: A financial institution, such as a bank or credit union, issues this sort of check, not an individual. Unlike a personal check, the financial institution ensures that the funds are available. If you require one, you must pay the check’s amount plus a service fee. For larger expenditures that require assured funding, cashier’s checks are a solid alternative.

Why Should I Use a Money Order?

Money orders are frequently used by those who do not have checking accounts to make substantial payments, such as paying rent or making a large purchase from an individual. Some people may require that you pay them using a money order.

If you’re concerned that using a check could lead to identity theft because checks include your bank account number, a money order, which does not include any bank account information, would be a better option.

Money orders can also be used to send money worldwide, such as to distant relatives. The majority of money order sellers have locations in major cities throughout the world. Before you buy a money order to transfer to another country, double-check that the recipient can cash it close to their home.

Where You Can Buy a Money Order With a Credit Card

Money orders can be obtained from a variety of locations, including banks and credit unions, check-cashing or payday loan companies, grocery stores, convenience stores, and the post office. They are also available for purchase by military personnel at military bases. A modest fee dependent on the amount of the money order will be charged. Fees vary depending on where the money order is issued, but they are usually only a few dollars. Issuing fees, for example, ranging from $1.25 to $1.75 at the post office, and $0.88 at Walmart.

Company  Accepts Credit Cards? Accepts Debit Cards?
WesternUnion**YESYES
K-Mart (uses WesternUnion)YESYES
WalmartNOYES
MoneyGram*NONO
CVS (uses MoneyGram)NONO
USPSNOYES
7-Eleven**YESYES
MoneytreeNONO
KrogerNOYES
PublixNOYES

How Do You Buy a Money Order With a Credit Card?

You’ll need to buy a money order using cash or a debit card in most circumstances. You cannot pay with a personal check because issuers require cash before issuing a money order. 7-Eleven outlets and Western Union are the only places where you can buy a money order with a credit card.

If you want to charge a money order, keep in mind that your credit card company may classify the purchase as a cash advance, which has a number of drawbacks. On a cash advance, you’ll pay more interest than you would on a typical purchase—sometimes a lot more. While you have a grace period before interest on a credit card purchase starts to accrue, interest on cash advances normally starts accruing right away. In addition to these fees, your credit card company may levy a cash advance fee of $20 or more.

If you have a credit usage ratio of more than 30%, getting a cash advance can harm your credit score. If you have a debt on your credit card, the issuer may apply your future payments to the purchase balance first, rather than the more expensive cash advance balance. This can make it more difficult to pay off your debt.

To avoid surprise costs, read your cardholder agreement carefully or contact your credit card provider to discover if purchasing a money order with a credit card is considered a cash advance.

How Do You Fill Out a Money Order?

Money orders are simple to fill out, but accuracy is crucial. The recipient may not be able to cash it if this is not the case.

The name and address of the person or business receiving the money order must be written on the money order. Because the money order will be checked against the recipient’s ID when they try to cash it, it’s a good idea to double-check the spelling first.

Make sure you sign the money order and get a receipt. If you wish to cancel the money order or if it goes missing and you need to verify that you bought it, you must have a receipt.

How Do You Cash a Money Order with a credit card?

Take a money order to a bank, credit union, or check cashing store to have it cashed. You can also take it to a post office, grocery store, or convenience store to return it to the organization that issued it. You’ll be asked to produce identity and sign the back of the money order wherever you cash it, just like you would when cashing or depositing a check.

Do Money Orders Expire?

Money orders do not have an expiration date. If you don’t cash a money order within a specified amount of time, the issuer may start charging you a monthly service fee. The fee will be subtracted from the total amount you get when you cash the money order. It’s a good idea to read over the terms and conditions on the back of the money order as soon as possible. If there are any service costs, make a note of how long you can wait to cash the money order before fees begin to accumulate.

How to Avoid Money Order Scams

Money orders that are legitimate are a safe way to send money. Unfortunately, fraudulent money orders are sometimes used by con artists to conduct fraud. Your bank or credit union may take a week or more to discover the charade after you place a bogus money order, at which point they may promptly withdraw the money from your account. If you’ve already spent the money, this could be an issue.

To stay safe, keep an eye out for the following frequent money order scams:

  • Online shopping scam: If you want to buy something online, you’ll have to pay with a money order. You send the money order, but the product is never delivered. When making a purchase with a money order, it’s ideal to do so in person. You’ll be able to hold the merchandise in your hands before handing over the money order.
  • A bogus buyer: When a thief sends you a bogus money order to pay for a commodity you’re selling, you should be suspicious. You’ve already dispatched the product by the time you notice the money order is bogus. When clients ask you to ship things to a private P.O. box, it’s usually a red flag that they’re being duped.
  • Bogus buyer’s remorse: A scammer buys something from you with a fake money order. You cash the money order and prepare to send them the goods. Before you do, however, they ask to cancel the order and get a refund. They might offer to let you keep part of the payment for your trouble but send them back the rest of the money order. When it’s discovered the payment was fraudulent, the check-casher may come after you for fees as well as a return of the fraudulently issued funds.
  • Rental Reversal: For a bed-and-breakfast or vacation rental stay, the scam artist sends a counterfeit money order to pay for a non-refundable security deposit, as well as some or all of the bill. They cancel the reservation and request a refund right away. If it’s discovered that the money order is a hoax, you deposit it, keep the security deposit, and give them the balance of the money.
  • Overpayment ploy: Scammers may send you a money order for an amount greater than the value of the item you’re selling. They then claim that it was an error and ask for the money back.
  • Deposit assistance: A stranger states they don’t have a bank account and requests that you deposit a money order on their behalf and then send them the dollars.

The Federal Trade Commission advises against sending a money order to someone you don’t know, persons who say they only accept money orders, or those who want you to keep the transaction a secret to avoid fraud. There are a few more things you may do to avoid money order scams:

  • Make sure the money is there. Before you cash a money order, make sure it’s real by contacting the issuer stated on the back of the document.
  • Keep an eye out for indicators of forgery. These can be difficult for a novice to identify, but you can take the money order to an issuer’s facility and have it inspected.
  • Look for signs of tampering. Is it possible that the sum has been reduced or increased? If that’s the case, it could be a ruse.
  • Money orders should not be used immediately. After depositing a money order, give it a week or two before using it or issuing a reimbursement to the sender.
  • Pressure techniques should be avoided at all costs. Scammers will pressure you to deposit the money order or send them a refund as soon as possible. They may try to elicit pity by suggesting that they need finances for an operation. Some people may try to intimidate you by threatening to sue you or harm your online reputation. When it comes to money orders, be wary of anyone who demands fast action.

What Are the Costs of Getting a Money Order with a Credit Card?

There are additional expenses associated with acquiring a money order through credit card, in addition to the money order fee: Fee for cash advances. Most credit cards have a cash advance cost of 3% to 5% of the transaction amount, with a $5 to $10 minimum fee. That’s a price of $30 to $50 on top of the money order fee on a $1,000 money order. “Aside from the convenience of collecting cash, you don’t get anything from that,” says Justin Pritchard, a certified financial planner and fee-only advisor in Montrose, Colorado.

APR on cash advances. On cash advances, many credit cards charge a higher annual percentage rate than on regular transactions. It can range from 25% to upwards of 30% with some cards. When purchasing a money order using your credit card, you may wind up paying substantially more depending on your usual purchase APR.

A grace period will not be given to you. Between your statement date and your due date on a conventional credit card purchase, you typically have at least 21 days of grace. If you pay your balance in full by the due date, you won’t have to pay any interest on it. However, cash advances don’t usually come with a grace period. As a result, the higher cash advance APR begins to accrue from the time the transaction is completed.

Because cash advances are so expensive, you should look for another way to buy a money order. The only exception is if your only other option is to pay much more money. Payday and auto title loans, for example, may have triple-digit annual percentage rates, making them substantially more expensive than a credit card cash advance.

[ READ: Aspire Credit Cards. ]

However, keep in mind that credit card companies are required to allocate any amount you pay above the minimum payment to the obligation with the highest interest rate first. So, if you buy a money order using your credit card, your payments will pay off that amount before your regular purchases, which can save you money. However, if you’re trying to pay off debt, it could stymie your efforts.

Can I earn rewards from the purchase of a money order?

Cash advances on credit cards do not earn rewards, so if you use your credit card to buy a money order, you will not receive any benefits.

“Balance transfers, cash advances, checks that access your card account, items returned for credit, unauthorised charges, interest and account fees, traveler’s checks, foreign currency purchases, money orders, wire transfers (and similar cash–like transactions), lottery tickets, gaming chips (and similar betting transactions),” according to the terms and conditions of the Citi Rewards+® Card, which is one of Bankrate’s top rewards credit cards.

You shouldn’t expect to earn rewards when you use your credit card to pay for a money order because these limits are very common among credit card issuers.

What should I do if I need an emergency money order?

If you require an emergency money order, you must locate the nearest merchant, retailer, or bank that provides money order services. Be aware that, while some stores, such as Walmart, may be open 24 hours a day, the money center within that store may have limited hours. If you need to purchase a money order after normal business hours, contact the merchant or shop to confirm that their money order services are still available.

What merchants accept credit cards for a money order?

Currently, no large merchants accept credit card payments for money orders. Although Western Union and 7-Eleven are frequently mentioned as venues where customers can pay for a money order with a credit card, we confirmed with both businesses that they only take cash payments. People cannot use credit cards to purchase money orders at Walmart, Moneygram, or the US Postal Service.

If you wish to buy a money order from a merchant who does not accept credit cards, you can get a cash advance from an ATM with your credit card and then use the cash to pay for your money order.

Some stores who do not take credit cards for money orders will still accept debit cards, so you may be able to purchase your money order with a debit card.

Using Money Orders Wisely

Money orders can be handy for safely transferring and sending money, but it’s crucial to understand how they function, as well as the risks and limitations associated with them. Although some credit card issuers allow you to purchase a money order using a credit card, many consider this a cash advance and may charge you additional fees and high interest rates. If you really must use a money order for any reason, purchasing one with a credit card should be your last alternative.

The Drawbacks of Buying a Money Order with Credit Card

You can usually pay for a money order using a credit card, but the transaction is usually treated as a cash advance rather than a regular purchase by credit card companies. Given the additional fees and interest charges you’ll incur, personal finance experts agree that using your credit card to purchase a money order is almost never a wise choice.

Here are the reasons why:

  • It is too costly. The cost of a cash advance is normally set at 5% or $10, whichever is higher. So you’d pay $10 for a $100 money order, and $25.4 for a $500 money order.
  • You’ll have to pay a higher rate of interest. The “cash advance APR” on most credit cards is higher than the usual purchase APR.
  • There isn’t any kind of grace period. Cash advances, unlike most credit card purchases, frequently charge interest right away. That means the amount you owe will continue to climb from the day you get the cash advance until you pay it off completely.
  • You will not receive any prizes. Cash advances do not earn reward points and do not count toward minimum spending requirements or other incentives.
  • Paying it off may be difficult. When you pay the minimum payment due on your credit card, the card issuer decides how to allocate it, which may be more toward lower-interest accounts. If you have a regular purchase balance on your card, your minimum payments will not be applied toward paying off your cash advance, which will continue to collect interest at the higher cash-advance rate.
  • It’s a difficult task. Only a few large retailers will let you pay for a money order using a credit card. The majority of others, including the United States Postal Service, do not. For a money order, the post office, for example, will only accept cash, debit cards, or travellers checks.

Conclusion

Even if a merchant allows credit cards for money order sales, buying a money order using cash or a debit card is usually a better alternative than buying one with a credit card. In any case, most retailers will not take credit cards for money order purchases. It is possible to purchase a money order with a credit card at Western Union if necessary, but this should only be used as a last resort.

Money order purchases are typically treated as cash advances by most credit card issuers, which can lead to debt cascading if the cardholder is unable to pay off the cash advance as quickly as feasible. Interest starts to accrue the day the transaction is made, and it is normally at a higher rate than the purchase price.

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