Q&A: Can You Buy a Money Order With a Credit Card?
Question: Can You Buy a Money Order With a Credit Card?
Answer: This is a common question because it can be very confusing. Folks sometimes think money orders and cashier’s checks are the same thing, but they are not. So first, let’s look at the difference between them.
A money order can be bought at banks, but also at a variety of locations. A money order looks similar to a check, but unlike a check, a money order requires payment to the money order issuer upfront. You aren’t promising to pay from your checking account when the check is cashed. You’ve already paid for the money order. So when you hand over a money order to someone, it’s like handing over cash.
A cashier’s check is only given by a financial institution, such as a bank or a credit union. While there’s a cap on the amount you can get with a money order, there’s no cap on a cashier’s check. However, this form of payment is a little more expensive than a money order.
Why Would You Need to Buy a Money Order?
Using a money order might seem out of place in today’s high-tech world. But there are a few circumstances where using a money order is in your best interests. Here are just a few circumstances where a money order is appropriate or necessary:
- You’re sending money by mail. You don’t want to stick five $100 bills in an envelope and just hope it gets to its destination intact. A money order is much more secure.
- You need to send money overseas. Many countries accept U.S. money orders. There are also international money orders and you can get more details on the U.S. Postal Service website: Send Money Abroad.
- You don’t have a checking account. Some folks can get a checking account due to past mistakes, such as bouncing a lot of checks. In this case, a money order saves the day.
- You don’t want the payee to know your bank account numbers or other personal information that’s on checks. This might be the case if you’re buying a car from an individual and you don’t know the seller.
Before you get a money order, be sure you confirm with the payee (the other person or company involved in the transaction) that a money order is an acceptable form of payment.
Where Can You Buy a Money Order?
You can buy money orders from a variety of places, including banks, credit unions, the post office, convenience stores and retail stores. There’s a small fee associated with it, so be sure you confirm the cost before you buy a money order.
Now, to answer your question, “Can You Buy a Money Order With a Credit Card?”, it depends on where you buy it. You can buy a money order from Western Union with a credit card, but Walmart and the U.S. Postal Service (USPS) do not accept credit cards. So it’s a good idea to make a call and ask about this before you get in your car.
But even if you have the option to pay with a credit card, you need to think twice before doing so. The reason to hesitate? Credit card issuers consider it a cash advance, which makes this an expensive way to buy a money order. You’ll have to pay a transaction fee, between 3 percent and 5 percent of the amount, plus interest.
For example, if you pay for a $1,000 money order with a credit card, you’ll pay at least a $30 fee. But the worst part is that you’ll start paying interest on $1,030 right off the bat. There’s no grace period for a cash advance. This is quite costly because the APRs for cash advances are usually much higher than the APR you get for purchases. So it’s best to use another form of payment, such as a debit card or even cash to buy a money order.
How Much Does a Money Order Cost?
There’s a small fee for money orders. To give you an idea of the amount, here’s what it costs to buy a money order at the U.S. Postal Service:
- It costs $1.25 for a money order between $.01 to $500.00.
- It costs $1.65 for a money order between $500.01 to $1,000.00
- It costs $0.40 for a military money order (this must be issued by a military facility)
The USPS will replace a lost or stolen money order, but there’s a $6.10 processing fee. Hang on to your receipt after you buy a money order just in case you need proof of the purchase or if you need to cancel it.