Can You Buy a Money Order With a Credit Card?

Money orders serve as a reliable payment method for individuals who may not use traditional checking accounts or for situations where cash is not advisable and personal checks are not accepted. They function much like a prepaid check, guaranteeing funds because payment is made upfront, providing security for the recipient. While credit cards offer convenience for many transactions, questions frequently arise regarding their use for purchasing these secure payment instruments.

Credit Card Policies for Money Orders

Credit card companies and payment networks generally classify money orders as cash equivalents. Directly purchasing a money order with a credit card is generally not permitted. These differ from standard retail purchases.

The rationale behind these policies centers on preventing activities like money laundering, where illicit funds could be converted into legitimate-looking instruments. Additionally, these rules deter cash-back schemes, which involve converting credit into liquid cash without incurring the appropriate fees or interest. Credit card issuers aim to avoid direct conversion of credit lines into cash without the associated costs of a cash advance.

Acquiring Money Orders Through Cash Advances

While direct credit card purchases of money orders are generally disallowed, a money order can sometimes be acquired indirectly using a credit card’s cash advance function. A cash advance involves borrowing money directly from your credit card’s available credit limit, rather than making a purchase of goods or services. If a vendor permits, a transaction involving a money order paid for with a credit card would be processed by the card issuer as a cash advance.

The actual money order is then purchased using the cash obtained through this advance. This means the credit card is not used to buy the money order itself, but rather to access the cash that subsequently funds the money order. The card issuer recognizes the transaction as a cash disbursement.

Financial Aspects and Vendor Locations

Using a credit card for a money order via a cash advance has distinct financial consequences. Card issuers typically impose a cash advance fee, which is commonly a percentage of the advanced amount, or a flat fee. This fee is applied immediately to the transaction.

Furthermore, cash advances usually come with a higher Annual Percentage Rate (APR) compared to the rate for standard credit card purchases. Cash advance APRs are significantly higher than purchase APRs, often 30% or more. Interest on cash advances accrues immediately, unlike purchases which may have a grace period.

Credit card issuers and vendors also impose transaction limits on cash advances and money order purchases. For instance, domestic money orders commonly have a maximum value of $1,000, though multiple money orders can be purchased. The amount obtainable through a credit card cash advance is typically a percentage of your overall credit limit, as determined by your card issuer.

Regarding vendor locations, the policies for purchasing money orders vary widely. The U.S. Postal Service, for example, explicitly states that credit cards are not accepted for money order purchases, requiring cash or debit cards instead. Similarly, major retailers like Walmart and MoneyGram, along with many grocery and convenience stores, generally do not permit direct credit card payments for money orders. Some Western Union locations may process a credit card transaction as a cash advance for a money transfer, incurring cash advance costs. Thus, while possible via a cash advance, obtaining a money order with a credit card is often costly and less straightforward.