Can You Purchase a Money Order With a Credit Card?
Understand the practicalities of buying a money order. This guide clarifies payment options and financial considerations beyond just credit cards.
A money order serves as a secure, prepaid payment instrument, functioning much like a check. It is typically purchased for a specific amount, plus a small fee, and then issued to a designated recipient. The primary purpose of a money order is to provide a guaranteed form of payment, as the funds are secured by the issuer at the time of purchase, eliminating the risk of it bouncing like a personal check. This makes money orders a trusted alternative when cash is not advisable and personal checks are not accepted.
Understanding Credit Cards and Money Orders
Purchasing a money order with a credit card is not permitted or recommended due to how credit card companies categorize such transactions. Most credit card issuers treat a money order purchase as a “cash advance,” not a standard retail transaction. A cash advance is a short-term loan against your credit line with specific, costly terms.
Cash advances incur higher interest rates than regular purchases, with interest beginning to accrue immediately from the transaction date, without any grace period. Credit card companies charge a cash advance fee, which commonly ranges from 3% to 5% of the transaction amount, or a flat fee like $10, whichever is greater. For example, a $400 money order with a 5% cash advance fee would add $20 in fees, plus immediate interest. Cash advance transactions do not earn credit card rewards, such as points or cash back, unlike regular purchases. Many money order vendors, including the United States Postal Service (USPS) and major retailers like Walmart, explicitly prohibit the use of credit cards for money order purchases to avoid these cash advance implications and potential fraud.
Commonly Accepted Payment Methods for Money Orders
When acquiring a money order, specific payment methods are widely accepted because they guarantee the funds are available upfront. Cash is the most universally accepted form of payment for money orders across all vendors. This ensures the issuer receives the full value of the money order immediately.
Debit cards are a common and accepted payment method. A debit card transaction directly withdraws funds from a linked bank account, similar to using cash, meaning there are no cash advance fees or immediate interest charges involved. Some locations may also accept traveler’s checks or other forms of certified funds, though their acceptance can vary by vendor.
Where to Purchase Money Orders
Money orders are available at a variety of accessible locations, making them a convenient option for many consumers. The United States Postal Service (USPS) is a widely recognized provider, offering domestic money orders up to a maximum value of $1,000 per order. While there is no daily limit on the number of money orders purchased, transactions totaling $3,000 or more may require the completion of a Funds Transaction Report (PS Form 8105-A) and valid identification.
Many major retail chains sell money orders, including large stores like Walmart, numerous grocery stores, and convenience stores. Walmart offers MoneyGram money orders with a maximum limit of $1,000 per single order, and they accept cash or debit cards for payment. Banks and credit unions are another reliable source for purchasing money orders, often limited to $1,000 per transaction.
Alternative Methods for Sending Funds
When money orders do not meet specific needs, particularly if credit card use is desired or larger sums are involved, several alternative methods exist for sending funds securely. Cashier’s checks, issued by banks or credit unions, are guaranteed by the institution’s own funds rather than a personal account. This makes them a secure option, often used for large transactions like real estate or vehicle purchases, and they do not have the same strict maximum limits as money orders.
Wire transfers offer a swift way to move money electronically between bank accounts, both domestically and internationally. While fast, wire transfers usually incur higher fees, with typical outgoing domestic fees ranging from $25 to $30 and international fees potentially higher due to currency conversion and intermediary bank charges. Online bill pay services, offered by most banks, provide a convenient and often free way to send payments directly from a bank account to businesses or individuals. Peer-to-peer (P2P) payment applications, such as Zelle, Venmo, or PayPal, allow for quick digital transfers between individuals, often for free when funded by a bank account or debit card. These apps are generally suitable for smaller, less formal transfers.