Buying a Money Order With a Credit Card
A money order is a safe way to send money through the mail or to make payments to companies that have limited payment options. But, if all you have is a credit card, you're probably wondering whether you can even use it to buy a money order.
Buying a Money Order With a Credit Card
You can buy a money order with a credit card, but it's not the smartest or least expensive option. 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.
Money Order Purchases Are Treated as Cash Advances
Because money orders are a type of guaranteed payment instrument that requires upfront cash, credit card issuers treat them as a cash equivalent transaction. These transactions are handled the same as a cash advance. Check out your credit card agreement and you'll see the ways that cash advance transactions are far more expensive than purchases and even balance transfers.
Your cash advance limit may be lower than your regular credit limit and in some cases, it might even be $0. This impacts the amount of the money order you can purchase. Check your available cash advance limit to be sure you have enough room for the amount you need, especially if you have a balance on the credit card you want to use. Your credit card issuer may not let you go over your limit, even if you've opted-in to having over-the-limit transactions processed.
You'll pay a cash advance fee on a money order purchased with a credit card. Cash advance fees vary by credit card issuer and are usually the greater of 5 percent of the transaction or $10. If you're getting a cash advance for a large amount, for example, to pay your rent, the cash advance fee could get expensive. For example, you'd pay a $50 fee on a $1,000 cash advance. And that's on top of whatever money order fee the merchant charges. The fees can make buying a money order with a credit card very expensive.
The money order purchases will have a high-interest rate and no grace period. Typically when you make purchases with your credit card, you can avoid a finance charge by paying the balance in full by the due date. You don't have this option with a money order purchase. Cash advance interest rates are higher than the rates for purchases, making the interest paid on a money order purchase higher than a regular purchase of the same amount.
If you have another balance on your credit card, paying off the expensive money order will be tricky. The minimum payment will always go to the balance with the highest interest rate, which will be your money order. The credit card issuer chooses how to apply anything above the minimum and that will typically be the lower interest rate balance. The result is that your money order balance (the most expensive one) goes down slowly because it's accruing so much interest.
No Credit Card Rewards on Money Order Purchases
If you were hoping to rack up a lot of rewards by buying money orders with your credit card, you're out of lock. Credit card issuers don't pay rewards on cash advances or cash equivalent transactions (or balance transfers) which makes your money order purchase ineligible for rewards.
Finding a Merchant Who Accepts Credit Cards for Money Orders
While credit card issuers will allow you to purchase a money order, many money order sellers do not accept credit cards as a form of payment. Western Union and 7-Eleven are currently two places that you can buy a money order with a credit card. Walmart and the United States Postal Service do not accept credit cards for money orders.
Some merchants will allow you to purchase money orders with a debit card, but only when you use a PIN. You can use your credit card to withdraw cash from the ATM and then purchase the money order, but you'll still pay the same fees.
If you're purchasing a money order to pay bills, check with the biller to see whether you can pay them directly with a credit card. You may have to pay a convenience fee, but it will likely be much less expensive than using your credit card to buy a money order.