If you need to make a payment or send money, a money order could be a safer alternative to a personal or cash check. You can usually buy one in cash, by wire transfer from your bank account, or by debit card.
But you might also be wondering, “Can I buy a money order with a credit card?” Technically, yes. But it can cause more problems than it’s worth.
How to use warrants
A money order is similar to a personal check in that it is a paper document that 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 orders online from some retailers. There are, however, a few differences that make money orders a preferred method of payment in certain situations:
The funds are guaranteed. When you use a personal check, the funds are only guaranteed if there is enough money in your bank account to cover them. As a result, many merchants do not accept personal checks for goods and services. Money Orders require payment in advance, so there is no doubt that the order will be returned.
No bank account is required. About 7.1 million U.S. households do not have a bank account, according to a 2019 survey by the Federal Deposit Insurance Corporation. A personal check usually requires a checking account or money market account, while a money order can be purchased at a post office or at retailers using other payment methods.
Your information stays safe. Personal checks show your route and account numbers, and often include your address, phone number, and the names of other people on the account as well. If you don’t know or trust the person who will process 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 buy a money order in a foreign currency, which is not possible with a personal check.
It’s safe. A money order with a designated recipient is much more secure than cash if you are sending payment by mail. Lost or stolen money orders can be replaced for a fee.
However, mandates are not free. For example, the U.S. Postal Service charges up to $ 1.75 for domestic money orders and up to $ 10.50 for international money orders.
Where can you buy a money order with a credit card?
There are currently no vendors that accept a credit card as a method of payment for Money Orders. (Western Union and 7-Eleven used to, but not anymore.) This means that in order to get a money order with your credit card, you’ll need to first get a cash advance from your credit card at an ATM or bank branch, or by a convenience check linked to your account.
Essentially, a cash advance is a cash loan against your credit card’s line of credit, says Maggie Germano, founder and CEO of Washington-based Maggie Germano Financial Coaching. “There are additional fees that come with getting a cash advance,” she says, “(and) there may also be higher interest rates.”
What are the costs of obtaining a money order with a credit card?
In addition to the money order fee, there are additional fees for obtaining a credit card money order:
Cash advance fees. Most credit cards charge a cash advance fee of 3% to 5% of the transaction amount with a minimum charge of $ 5 to $ 10. On a $ 1,000 money order, this is a fee of $ 30 to $ 50 in addition to the money order fee. “You don’t get any of that other than the convenience of getting the money,” says Justin Pritchard, certified financial planner and paid advisor in Montrose, Colorado.
APR cash advance. Many credit cards charge a higher annual percentage on cash advances than on regular purchases. With some cards, it can range from 25% to over 30%. Depending on your regular purchase APR, you could end up paying a lot more when you buy a money order with your credit card.
You will not have a grace period. With a regular credit card purchase, you usually have a grace period of at least 21 days between the date of your statement and the due date. You will not pay any interest on your balance as long as you pay it in full by the due date. However, cash advances generally do not have a grace period. This means that the higher cash advance APR begins to accumulate from the date of the transaction.
Because cash advances are so expensive, it is best to find another way to purchase money order. The only exception is if your only other option is to use an even more expensive payment method. Payday loans and auto title loans, for example, can charge triple-digit APRs, making them much more expensive than a cash advance with a credit card.
One thing to note, however, is that credit card companies are required to first apply any amount you pay in excess of the minimum payment to the debt with the highest rate. So, if you use your credit card to purchase a money order, your payments will reimburse that amount before your regular purchases, which can help save you money. But it could halt your progress if you’re trying to pay off an existing debt.
Alternatives to mandates 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 you don’t have the money or checking account balance to cover it, consider using a credit card only after you have follow all your options. Here are some things to think about:
Ask if you can pay by credit card. If you need to pay rent, utility, or other bill payment, you may have the option to pay with your credit card directly. Often times, these types of merchants will charge a nominal fee to use your credit card, but it’s cheaper than a money order, cash advance fees, and interest.
Get a loan. The average interest rate for personal loans is 9.46%, according to February 2021 data from the Federal Reserve. This is significantly less than a typical cash advance APR. If your credit is not good and you cannot qualify for a low interest rate, consider applying for a secured personal loan or requesting a short term loan from a family member or friend. Germano recommends entering into an agreement if you request a loan from friends or family.
“But be aware that it could affect your relationship, even if you repay the money as agreed,” adds Pritchard.
Apply for a payday advance. Ask your payroll manager if you can get an advance on your next paycheck. Depending on your employer, you may have to pay it back over time with interest or just miss your next paycheck. Find out about the terms and make sure that payments or the missed paycheck won’t make your cash flow worse.
Earn extra money. Selling items you own or working nearby might help free money quickly for a term.
When considering these and other options, make sure you understand what your costs are and whether they are worth it.
When comparing your options, Pritchard recommends looking at the total cost in interest and fees. “If a cash advance is the cheapest option, then it’s a reasonable solution,” he says. In other words, if there is a need to purchase a money order, do your due diligence to make sure you spend as little money as possible in the process.