If you need to make a secure payment, a money order can be a safe alternative to personal checks or cash.
They can usually be purchased with cash or a debit card, but you might be wondering: “Can I buy a money order with a credit card?”
Technically, the answer is yes, but it often comes with significant financial downsides.
In this guide, we’ll explore the implications of using a credit card to purchase a money order and suggest some better alternatives to consider.
Should You Buy a Money Order with a Credit Card?
While it’s technically possible to purchase a money order with a credit card, it’s generally not advisable. The main reason is that you can’t pay directly with your card.
To make it work, you would need to take out a cash advance from your credit card, which can be costly due to high fees and interest rates.
Before choosing this option, it’s a good idea to explore other methods of payment, especially if you don’t have cash on hand.
How Do Money Orders Work?
A money order is a paper document similar to a personal check that can be cashed or deposited into a bank account by the recipient.
It’s often used to pay rent, settle bills, send money to friends and family, or even for certain online purchases. Here are some key benefits of using a money order:
- Guaranteed Funds: Unlike personal checks, which may bounce if there aren’t enough funds in your account, money orders require upfront payment, ensuring the recipient gets paid.
- No Bank Account Needed: For people who don’t have a bank account, money orders provide an accessible way to send money.
- Privacy: Personal checks show sensitive information, such as your bank account and routing numbers. A money order contains less personal information, making it a safer option if you’re unsure about who will handle your payment.
- Foreign Currency: Money orders can be purchased in foreign currencies, making them a useful tool for sending money internationally.
- Security: A money order made out to a specific person is much safer than mailing cash. If it’s lost or stolen, it can usually be replaced for a fee.
However, money orders come with a cost.
For instance, the U.S. Postal Service charges up to $2.40 for domestic money orders and $49.65 plus a processing fee for international ones.
Can You Buy a Money Order with a Credit Card?
While some retailers used to accept credit cards for money order purchases, this is no longer the case. To buy a money order with a credit card, you’ll need to get a cash advance from your card, which you can then use to purchase the money order.
A cash advance essentially allows you to borrow cash from your card’s credit limit. However, this comes with several drawbacks, including high fees and immediate interest charges, which can make this option expensive.
What Are the Costs of Buying a Money Order with a Credit Card?
If you decide to buy a money order with a credit card through a cash advance, here are some of the costs you’ll face:
- Cash Advance Fee: Most credit cards charge a cash advance fee, usually around 5% of the transaction amount, with a minimum fee of $5 to $10. For example, if you withdraw $1,000, you’ll pay a $50 fee on top of the money order fee.
- Cash Advance APR: Cash advances often come with a higher interest rate than regular purchases, sometimes as high as 29.99%. If you don’t pay off the balance quickly, the interest can add up fast.
- No Grace Period: Unlike regular credit card purchases, cash advances don’t have a grace period. Interest starts accruing from the day you take out the advance, meaning you’ll owe more even if you pay off the balance quickly.
Given these costs, using a cash advance to buy a money order is usually only worth it if your alternative options are even more expensive, such as payday loans, which can have extremely high APRs.
Alternatives to Buying a Money Order with a Credit Card
Before resorting to a cash advance, consider these alternatives:
- Pay Directly with a Credit Card: If you’re using a money order to pay rent or bills, check if the merchant or service provider accepts credit card payments. Even if they charge a small fee, it’s often cheaper than paying the fees associated with cash advances.
- Get a Personal Loan: Personal loans generally offer much lower interest rates than cash advances, especially if you have good credit. Even if your credit is less than perfect, a personal loan may still be cheaper than a credit card cash advance.
- Request a Salary Advance: If you’re employed, you might be able to ask your employer for an advance on your salary. Some companies offer paycheck advances without charging interest, making this a cheaper alternative to a credit card cash advance.
- Earn Extra Cash: Consider selling unused items or taking on a side gig to earn extra money. This way, you can avoid fees altogether by paying for the money order with cash or a debit card.
Conclusion:
While it’s possible to buy a money order with a credit card through a cash advance, it’s rarely a good financial decision due to high fees and interest rates.
If you need a money order, explore other payment options, such as paying directly with a credit card or taking out a personal loan, to avoid unnecessary costs.
Always weigh your alternatives carefully to ensure you’re making the most cost-effective decision.