A money order is a certificate that is exchangeable for cash. They’re a secure way of obtaining and sending funds because, unlike checks, money orders don’t bounce or expire. Just like with lottery tickets or cash advances, you can buy money orders with your credit card, but most experts recommend that you avoid doing so. And money orders have limits: the maximum amount you can take out with a money order is usually around $1,000.
Read on to learn more about what a money order is, how to purchase one with a credit card, reasons why you might consider buying a money order, and a list of alternative payment methods.
What is a money order?
Money orders are a secure form of payment that you can use instead of checks or cash. Why? Like a check, money orders need a specific recipient, retailer, or business, and only the addressed party can cash it in.
But there’s no potential for it to bounce like a check; you have to pay for a money order upfront, which guarantees that you have the resources to make the payment. In addition, money orders don’t expire, nor do they incur interest.
That said, there are limitations on how much money you can send on a money order. Generally, the maximum amount for one order is $1,000. If you need to send more money than that, you must buy additional orders.
You can use orders to pay for domestic purchases, or you can mail them internationally as well. These are often available to buy at banks, other credit unions, convenience stores, grocery stores,
and post offices. All of these places will charge a processing fee that can fall anywhere between one and two dollars.
How do you buy a money order with a credit card?
Even though you can buy a money order with your credit card, most places will only accept physical cash or a debit card. Credit card companies want to ensure that you actually have the funds to pay for the order instead of borrowing that amount from the lender.
Why you might need to buy a money order
If you don't have a personalized checking account set up, money orders can be a great way to make rent payments, minimum payments, or other larger purchases. Listed below are a few reasons why you might consider buying a money order.
One: No bank account is required. Based on data gathered by the Federal Deposit Insurance Corporation, more than seven million Americans don’t have a bank account as of 2019. (Don’t worry — you don’t need one to purchase a money order.) You aren’t at risk of overdrafting your account by trying to withdraw money that you don’t have.
Two: Sending money to another country. Most established financial institutions have branches worldwide, meaning you can buy a money order with foreign currency. And, so long as the money order’s receiver can exchange it, this is a safe way of delivering money.
Three: It's required. Some businesses may only accept money orders as a means of payment.
Four: It's more secure. Alongside money orders never bouncing, they don’t include your bank account number, significantly lowering the risk of someone stealing your information.
4 disadvantages of buying money orders with a credit card
Money orders, despite their perks, do have their downsides, especially if you’re determined to buy a money order with a credit card. These factors include:
One: It's expensive. Credit card issuers treat money order purchases as cash advances, which can be very pricey. Experts recommend avoiding taking out cash advances with your credit card unless absolutely necessary. There are also cash advance fees to consider.
Two: A higher interest rate. Since money orders fall under the category of “cash advances,” they incur a steep interest rate. You’ll end up paying more in fees than you do for the original order if you can’t pay it off immediately.
Three: No grace period. Unlike typical credit card purchases, there is no 20 or 21 day grace period with a money order. A money order’s high interest rates start to pile up immediately.
Four: It can hurt your credit score. If you still owe a balance on your credit card and use it to take out a money order or a cash advance, your credit utilization can rise. Credit usage accounts for 30 percent of your credit score and is the second most significant aspect after payment history. Both your unpaid balance and your money order will earn interest, which can quickly get out of hand and land you in debt.
Where can you buy a money order with a credit card?
Only 7 Eleven convenience stores and Western Union accept credit cards for money order purchases. You can’t buy a money order online.
4 alternatives to money orders
Be sure to research your options before deciding to make a potentially risky purchase with your credit card. Listed below are three reasonable alternatives to money orders.
One: A credit card. Pay with your credit card directly. That way, you’ll have a grace period and, if you pay off your entire balance before the end of the monthly billing cycle, you won’t have to worry about paying any interest.
There are many different kinds of credit cards out there for you to use. If you select the right one, not only will you be able to save money, as you won’t have to stress about covering unnecessary costs like yearly APR fees, but you’ll be able to grow your wealth at the same time due to the offered rewards programs.
Two: There are also excellent financial alternatives to credit cards.
One such tool is Point Card.
Point is designed as a transparent, easy-to-use alternative payment card. Cardholders have the ability and the freedom to exercise fiscal independence and spend their own money all while receiving exclusive benefits. These include unlimited cash-back and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases.
Plus, as touched upon, Point comes with multiple features designed to aid you in protecting your money. You work hard for what you earn, and Point works equally as hard for you in return. Such measures include rental car and phone insurance, new purchase insurance, two free ATM withdrawals every month, fraud protection with zero liability, and no interest rates.
Point has your back every step of the way.
Three: Take out a loan. Personal loans have a significantly lower interest rate than cash advances at approximately 10 percent. While this type of loan is usually smaller in volume, they’re easier to be approved for — even with a low credit score.
Four: Inquire about a salary advance. There’s nothing wrong with asking your employer to send you your paycheck earlier so you can pay your bills. Consequences of doing so can include missing your subsequent paycheck or having to pay off your advance with a small fee over a certain amount of time.
Made to spend.