When making payments to businesses that only accept certain payment methods or when sending money through the mail, a money order is a reliable and secure option. If, on the other hand, you only have access to a credit card, you may be wondering whether or not it is even possible to use that card to purchase a money order.
Paying with a Credit Card to Purchase a Money Order
You can use a credit card to purchase a money order, but doing so is not the most financially savvy or cost-effective choice. Even though most credit card issuers let you buy money orders with your card, there are a few drawbacks to this practice that you should be aware of before using it.The purchase of money orders is considered to be a cash advance
Credit card issuers consider the purchase of a money order to be the equivalent of cash because money orders are a form of guaranteed payment instrument that calls for the payment of cash in advance. The processing of these transactions is identical to that of a cash advance. If you look at the terms of your credit card agreement, you'll see that cash advance transactions have significantly higher fees than other types of transactions, including purchases and even balance transfers. Issuers of credit cards will occasionally set a lower cash advance limit; in some cases, this limit will be as low as zero dollars. Because of this, the number of money orders that you can buy will be affected. Check your available cash advance limit to ensure that you have sufficient room for the amount that you need. This is especially important to do if you already have a balance on the credit card that you want to use for the cash advance. Even if you have opted in to have over-the-limit transactions processed, it is possible that the company that issued your credit card will not allow you to go over your limit. Before using your credit card to buy a money order, it is important to take into consideration the cash advance fee. The fees can differ from one credit card issuer to another, but they are typically higher than five percent of the total transaction or ten dollars. The fee for getting a cash advance could end up being quite pricey if you need one for a significant amount of money, for instance to pay your rent. On a cash advance of $1,000, for instance, you would be required to pay a fee of $50. This is in addition to any fees the retailer may charge for the purchase of a money order. Because of the fees, using a credit card to buy a money order can end up being a very pricey option. The interest rate on money order purchases will be extremely high, and there will be no grace period offered. This is similar to cash advances. Because there is no grace period, there is no chance to avoid having to pay interest on the purchase the way you would be able to with a regular purchase. The interest paid on a money order purchase is higher than the interest paid on a regular purchase of the same amount. This is due to the fact that the interest rates for cash advances are higher than the rates for purchases. NOTE: If you pay off your money order purchase balance as quickly as you can, even before the due date, you will be able to avoid paying any interest on the transaction. It will be difficult to pay off the expensive money order if you still have a balance on your credit card from a previous purchase. When making the required minimum payment, the money will always be applied to the balance that carries the lowest interest rate. The issuer of the credit card decides how to apply any additional funds that are paid in excess of the minimum, and this is typically the balance that has the highest interest rate. Because of the high rate of interest that is being accrued, the result is that your money order balance, which is the most expensive one, decreases very slowly.There are no credit card rewards associated with the purchase of money orders
It won't work out for you to rack up a lot of rewards points by using your credit card to buy money orders, so don't get your hopes up about that. Since credit card issuers do not pay rewards on cash advances or cash equivalent transactions (or balance transfers), your purchase of a money order does not qualify for rewards and therefore cannot be made using your credit card.Discovering a Retailer That Takes Credit Cards for Money Orders
Even though most credit card issuers will let you buy a money order with your card, the sellers of money orders typically do not accept credit cards as a form of payment. Included in this category are Walmart as well as the United States Postal Service. There are currently two locations in the United States where you can use a credit card to purchase a money order: Western Union and 7-Eleven. Money orders can be purchased with a debit card at some stores, but the use of a personal identification number (PIN) is required. When time is of the essence, you can get cash from an ATM using your credit card and then buy the money order with the cash that you have. You will be subject to the same rates of interest and fees, but you will have more options available to you when purchasing the money order. Before you go out and buy a money order to pay your bills, you should check with the company that sent you the bill to see if you can pay them directly with a credit card instead. It is possible that you will be required to pay a convenience fee, but overall, it will probably be a lot cheaper than purchasing a money order with a credit card.