Think Twice Before You Buy a Money Order With a Credit Card
If you need to make a payment or send funds, a money order can be a safe alternative to a personal check or cash. You can typically buy one with a debit card or cash, but you may also wonder, “Can I buy a money order with a credit card?” Technically, the answer is yes, but it may be more trouble than it’s worth.
Should You Get a Money Order With a Credit Card?
It’s generally not a good idea to use a credit card to buy a money order, primarily because it’s not possible to do so directly. To make it work, you need to request a cash advance, which can be incredibly costly.
It’s a good idea to consider other alternatives if you don’t have the cash on hand.
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 a 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 money orders a preferred payment method in certain situations:
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 the order will bounce.
No bank account is required. Roughly 5.9 million U.S. households don’t have a bank account, according to a 2021 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 a post office or retailers using other payment methods.
Your information stays safe. Personal checks show your routing and account numbers, and often include the names of other people on the account. If you don’t know or trust the person who will handle 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, depending on the destination country, something that isn’t possible with a personal check.
It’s secure. 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.
That said, money orders aren’t free. For example, the U.S. Postal Service charges up to $2.40 for domestic money orders and $49.65 plus a processing fee for international money orders.
Where Can You Buy a Money Order With a Credit Card?
There are currently no providers that accept a credit card as a form of payment for money orders. (Western Union and 7-Eleven once did, but not anymore.) This means that in order to get a money order with your credit card, you’ll have to first obtain a cash advance from the card at an ATM or a bank branch, or through a convenience check tied to your account.
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 Costs of Getting a Money Order With a Credit Card?
On top of the money order fee, there are additional costs of getting a money order via credit card:
- Cash advance fee. Most credit cards charge a cash advance fee of about 5% of the transaction amount with a minimum fee of $5 to $10. On a $1,000 money order, that’s a fee of $50 on top of the money order fee. “You don’t get anything from that besides the convenience of getting cash,” says Justin Pritchard, a certified financial planner, fee-only advisor and founder of Colorado-based Approach Financial.
- Cash advance APR. Many credit cards charge a higher annual percentage rate on cash advances than they do on regular purchases. With some cards, it can be up to 29.99%. Depending on what your regular purchase APR is, you could end up paying much more when buying a money order with your credit card.
- No grace period. With a regular credit card purchase, you typically have a grace period of at least 21 days between your statement date and your due date. You won’t pay any interest on your balance as long as you pay it in full by the due date. Cash advances typically don’t qualify for a grace period, though. That means the higher cash advance APR starts accruing from the date of the transaction.
Because cash advances are so costly, it’s best to find another means to purchase a money order. The exception is if your only other option is to use an even more expensive form of payment. Payday loans and auto title loans, for instance, may charge triple-digit APRs, making them significantly more expensive than a credit card cash advance.
One thing to note, however, is that credit card companies are required to apply any amount you pay in excess of the minimum payment to the debt with the highest rate first. So, if you use your credit card to purchase a money order, your payments would pay down that amount before your regular purchases, which can help you save money. But it could interrupt your progress if you’re trying to pay down existing debt.
Money Order Alternatives to Consider
Can you get a money order with a credit card? Yes. But if you need a money order to pay a bill or send money, and don’t have the cash or checking account balance to cover it, consider using a credit card only after you’ve pursued all of your options. Here are some to think about:
- Ask if you can pay by credit card. If you need to make a rent, utility or other bill payment, you may have the option to pay with your credit card directly. Often, these types of merchants will charge a small fee to use your credit card, but it’s cheaper than a money order and cash advance fees and interest.
- Get a loan. The average personal loan interest rate is 11.48% for a 24-month loan, according to February 2023 data from the Federal Reserve. That’s significantly less than a typical cash advance APR. If your credit isn’t great and you can’t qualify for a low interest rate, consider applying for a secured personal loan or asking a family member or friend for a short-term loan. Germano recommends drawing up an agreement if you ask friends or family for a loan. “But be aware this could affect your relationship, even if you repay the money as agreed,” Pritchard adds.
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Request a salary advance. Ask your payroll manager if you can get an advance on your next paycheck. Depending on your employer, you may need to pay it back over time with interest or simply miss your next paycheck. Ask about the terms, and make sure that the payments or missed paycheck won’t make matters worse for your cash flow.
You can also look into paycheck advance apps, such as Dave, EarnIn or MoneyLion, which may provide you with a small amount of cash without fees or interest.
- Earn extra cash. Selling items you own or working a side gig could help you free up cash quickly for a money order.
As you consider these and other options, make sure you understand what your costs are and whether they’re worth it.
When comparing your options, Pritchard recommends looking at the total cost in interest and fees. “If a cash advance is the least expensive option, then it’s a reasonable solution,” he says. In other words, if it’s necessary to buy a money order, do your due diligence to ensure that you spend as little money as possible in the process.
Reviewed on May 19, 2023: This story was previously published at an earlier date and has been updated with new information.
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