Can You Get a Money Order on a Credit Card?

Money orders offer a secure payment method, providing a reliable alternative to personal checks or cash for various transactions. These instruments guarantee funds to the recipient, making them suitable for situations where personal checks might not be accepted or cash is not practical. Many individuals consider money orders for bill payments, rent, or sending money to others.

Understanding Money Order Purchases with Credit Cards

When a credit card is used to acquire a money order, the transaction is almost universally categorized as a “cash advance” by credit card issuers. A cash advance involves borrowing money directly against a credit card’s available credit limit rather than making a purchase of goods or services.

Credit card companies implement this policy because they view cash advances as a higher-risk transaction compared to standard purchases. Unlike buying an item, a money order can be quickly converted into cash, bypassing the usual merchant processing and potential for returns. Consequently, cash advance limits are often set lower than a card’s overall credit limit, sometimes capping at 20% to 30% of the total available credit.

Most vendors that issue money orders, such as post offices, grocery stores, and convenience stores, generally do not accept credit cards for these transactions. For instance, the United States Postal Service explicitly states that money orders cannot be purchased with a credit card, requiring cash or a debit card instead. Similarly, large retailers like Walmart specify that money orders must be purchased using cash or a debit card.

Costs Associated with Credit Card Money Orders

Purchasing a money order with a credit card incurs specific financial implications that differ significantly from regular credit card purchases. One immediate cost is a cash advance fee. This fee is commonly a percentage of the advanced amount, often ranging from 3% to 5%, or a flat fee such as $10, whichever amount is greater. For example, a $100 money order might incur a $10 fee, while a $500 money order could result in a $15 to $25 fee.

Beyond the upfront fee, cash advances are subject to a higher Annual Percentage Rate (APR) compared to the rate applied to standard purchases. While purchase APRs can vary, cash advance APRs are often several percentage points higher, frequently ranging from 20% to 30% or more. For instance, if a card’s purchase APR is 18%, its cash advance APR might be 25% or higher, reflecting the perceived increased risk to the issuer.

A notable financial burden of cash advances is the immediate accrual of interest. Unlike typical credit card purchases that often come with an interest-free grace period if the balance is paid in full by the due date, interest on a cash advance begins accumulating from the very day the transaction occurs. The outstanding cash advance balance, along with its accrued interest and fees, contributes to the cardholder’s total balance and can negatively impact their credit utilization ratio if not repaid promptly. A higher utilization ratio, which measures the amount of credit used against the total available credit, can potentially affect a credit score.

Alternative Payment Methods for Money Orders

The most straightforward approach involves using cash, which is universally accepted at all money order issuing locations. This method avoids any fees beyond the small issuing charge for the money order itself.

Another widely accepted alternative is a debit card. When a debit card is used, funds are directly withdrawn from a linked bank account, eliminating the credit transaction and associated cash advance fees or interest. Most retailers and service providers that sell money orders, including major grocery chains and convenience stores, readily accept debit cards for this purpose.

Individuals can also obtain money orders directly from their bank or credit union, where funds can be drawn from a checking or savings account. This method often involves a small service fee but typically provides a secure and convenient way to acquire the money order without incurring credit-related charges.