2023 Can You Buy Money Orders
with a Credit Card? Pros & Cons

About Money Orders

What is a money order?

A money order is a payment instrument issued by a financial institution or the government. These certificates are usually used by people who don't have access to a checking account to pay debts.

Money orders are a guarantee to recipients that the said fund is available and accessible to them. They work similarly to checks because they allow the payee to access money on demand. The only difference is that money orders are more secure than personal checks. They don't provide the payee with your bank information.

Money orders don't cost a lot- they are available at a small fee at banks, credit unions, post offices, stores, and some gas stations.

Why do you need a money order?

• Money orders are a suitable option when you need more privacy during a transaction. Unlike personal checks, it doesn't list your account number and other information.

• Some people or businesses prefer money orders for their services. You may need it to pay for expenses such as rent and virtual purchases.

• You can use money orders for the international payment. It is a more convenient and secure payment option to cash and personal checks.

• You can send money orders via mail, which makes them handy for remote payments.

How Do You Buy Money Orders?

1. You need to find a provider that offers money orders, such as a post office, bank, or retail store.
2. You need to pay the face value of the money order, along with the issuer's fee.
3. You need to provide your name, address, the payee's name, the amount, the date of purchase, and your signature.

Once you've completed these steps, you will receive a receipt and a copy of the money order, which you can then send to the recipient.

What Are The Limitations and Risks Of Using Money Orders?

• Money orders may not be suitable for larger transactions.

  One of the most significant limitations of money orders is the maximum amount that can be sent. Money orders are typically limited to $1,000, and in some places, the number of money orders that can be purchased is also capped.

• The Cost

  Cost is another factor you should consider when purchasing a money order. While they are generally cheap, the cost depends on who's providing the money order.

  Typically, you may get a money order for $1 at convenience stores. Some providers, however, may charge an additional fee when you use certain services, like expedited delivery and lost or stolen money replacement money orders. Banks and Credit Unions may also charge up to $5 for money order purchases.

• Prone to Scam

  One of the most significant risks associated with money orders is the potential for scams. Fraudsters may create fake money orders to deceive unsuspecting victims, often targeting individuals who are selling goods or services online.

  It's important to be cautious when using money orders and only purchase them from reputable providers. Additionally, if you're selling goods or services online, it's best to wait until the money order has cleared before sending the item.

Is Buying Money Offer A Smart Choice?

Benefits of Using Credit Cards To Buy Money Orders

• For Convenience

  Buying money orders with a credit card offers convenience. In situations where your debit card is not with you or there's no cash, you can easily pay with your credit card.

  Note, however, that your credit card issuer may consider it a cash advance and charge you extra for the payment.

• It is Safer

  Using your credit card to buy a money order is safe because you don't have to provide your bank information for the money received.

  Your personal information such as routing and account number will not be displayed on the money order. This can help prevent fraud or identity theft, especially when you have suspicions.

• It can help build your credit

  When you use your credit card responsibly, it can help build your credit over time. When you use your card to purchase money orders, ensure you pay your debts in time. You can also pay more than the minimum amount on your credit card to stay on the safe side.

Cons of Buying Money Orders with a Credit Card

• Credit Card Advances Attract High Charges

  Buying a money order with a credit card charges a cash advance fee. Cash advance fees are typically charged as a percentage of the transaction amount, and can be as high as 5% of the total. This fee can quickly add up, making it an expensive option.

• Outrageous Interest Rates

  The interest rate on cash advances can be significantly higher than the interest rate on regular purchases, often exceeding 20% APR. This means that you'll end up paying more in interest over time.

• Credit Cards Don't Give Grace Periods

  When you use a credit card to make a regular purchase, you typically have a grace period during which you can pay off the balance without accruing interest.

  However, with cash advances, there is no grace period. Interest begins to accrue immediately, making it difficult to avoid paying extra fees.

• There will most likely be no rewards

  Most credit cards offer rewards for regular purchases, such as cashback or points towards travel or merchandise.

  However, cash advances, including purchases of money orders, do not typically earn rewards. This means that you'll miss out on potential rewards by using your credit card for this type of transaction.

• Difficulties Paying Back Cash Advances

  Finally, paying off a cash advance can be more difficult than paying off a regular purchase. Because the interest rate is higher, the amount owed can quickly add up, making it challenging to pay off the balance. This can lead to a cycle of debt that can be difficult to break.

5 Alternatives To Money Order payments

If you've decided that using a credit card to purchase a money order is not the best option for you, there are five alternatives that you can consider.

Personal Loan

A personal loan is a loan offered by banks and other financial institutions to borrowers for different personal needs. It usually requires you to repay the loans in installments monthly for a set period of time. A personal loan comes with interest rates that you are meant to pay on the loan amount when repaying.

Personal loans are suitable for making larger payments as opposed to money orders. Their interest rates are also less than credit card APRs, making them a more affordable payment option.

Keep in mind, however, that taking out loans should be considered last. This is because it increases your debt and may even become a blight in your finances. For instance, late loan payments can lower your credit score. An expensive loan may also push you into a debt cycle, making it difficult to be financially free.

Salary advance

Salary advances are loans offered by employers to their employees against the next paychecks. It means the employer agrees to let their staff borrow a fraction of their salary in advance.

If you have a good relationship with your employer and the work policy allows it, you can request an advance and repay when you collect your next paycheck(s).

This option is one of the cheapest and most convenient ways to get an advance. It doesn't come with an interest rate or extra fee, unlike money orders that you have to purchase.

Note, however, that borrowing from your salary means that your next paycheck (s) will be smaller. This can make it difficult for you to manage other expenses.

Peer-to-peer payment apps

Another way to send money conveniently and securely is via peer-to-peer payment apps, like Cash App, Zelle, and Venmo. These are payment platforms that enable you to send and receive money fast and easily from friends and family.

Unlike money orders, cash sent via peer-to-peer apps is faster and much more convenient. This makes it a better option for urgent transactions. You can also send larger amounts on the platforms than via money orders.

However, the fees charged on peer-to-peer transactions may be high, depending on the platform. You may want to weigh the cost and consider other options before using this method.

Cashier's Checks

Cashier checks are payment instruments issued by a bank to make large payments. They are usually sent from the bank's account and not the payer themselves. This means that you will not see the information of a payer on such checks, making them a secure payment means.

Cashier checks can save you the cost and time of buying multiple money orders. They are also safer since your personal details are shielded from the payee.

One major disadvantage a cashier's check may pose is that they have higher fees than money orders. They are also prone to fraud risks and require you to visit a physical bank branch.

Banking Apps

Lastly, you can send money via apps offering banking and financial services. These banking apps operate similarly to traditional banks, only that they operate virtually. You can carry out various transactions on the apps, from managing your finances to borrowing and repaying loans.

While banking apps may not be the best option for all types of transactions, they are easier to access than money orders. You can also make larger transactions on the app, unlike money orders that max out at $1000.

One thing you should be wary of, however, is banking app fees. Some charge outrageous fees for transactions and some are plagued with technical issues that may delay payments.

FAQs

Can A Money Order Expire?

Yes, money orders typically have an expiration date, which can vary depending on the provider. It's important to check the expiration date before purchasing a money order and make sure to use it before it expires.

If a money order does expire, you may be able to request a replacement from the provider, but there may be additional fees involved.

Can You Buy A Money Order Online With a Credit Card?

The chances that you find a provider offering money orders online are very slim. This is because money Orders are expected to be purchased in person, with cash or a debit card. This, however, doesn't mean that you are entirely out of luck.

If you search enough, you may find a few websites advertising money orders online. Only beware of scams because such services are not usually genuine. The best thing is to go purchase your money order in person. Luckily, you can find them around at convenience stores, post offices, and even gas stations.

Which Providers Accept Money Order Purchase With Credit Cards?

Providers rarely allow people to buy money orders with a credit card. However, you may find such an option on 7-11 and Western Union- and this may not be available at all locations.

The majority of the providers prefer you purchase your money order in person and with cash or a debit card.