Can You Use a Credit Card for a Money Order?

A money order is a secure, prepaid document, similar to a check, used for sending a specific amount of money to a designated recipient. Many use them when personal checks are not accepted or they lack a bank account. While convenient, purchasing a money order with a credit card involves specific financial considerations.

Obtaining a Money Order

Money orders are widely available. Common issuers include the United States Postal Service (USPS), banks, credit unions, and retailers like Walmart, Western Union, MoneyGram, and grocery stores. To purchase one, you need to provide the exact amount plus a small service fee. Accepted payment methods are limited to cash or a debit card. Most money orders have a maximum limit, often $1,000, requiring multiple orders for larger payments.

Using a Credit Card for Money Orders

Directly purchasing a money order with a credit card is generally not permitted by vendors or credit card companies. This is because the transaction is treated as a cash advance, obtaining cash rather than a standard purchase. Credit card issuers disallow use for cash equivalents like money orders to prevent bypassing cash advance fees and interest rates.

If a credit card is used for a money order, it processes as a cash advance, triggering financial consequences. Cash advances incur an immediate transaction fee, ranging from 3% to 5% of the amount, or a flat fee such as $10, whichever is greater. They are also subject to a higher Annual Percentage Rate (APR) compared to standard purchases, often 25% to 36%. Unlike regular purchases, cash advances have no grace period, meaning interest accrues immediately.

Using a credit card for a cash advance can also indirectly affect your credit score. It increases your credit utilization ratio—the amount of credit used compared to total available credit. A high utilization ratio, above 30%, signals increased financial risk to credit bureaus and can lower your credit score. High fees and immediate interest accrual make it challenging to repay the balance, increasing the risk of missed payments which negatively impact credit history.

Alternatives for Payments

Given the costs of using a credit card for money orders, several other payment options offer secure and more economical alternatives. A debit card is widely accepted for purchasing money orders at most locations, avoiding cash advance fees or higher interest rates. Funds are drawn directly from your linked bank account, avoiding debt.

Prepaid debit cards offer another option for those without a traditional bank account or who prefer not to use their primary one. These reloadable cards allow you to load funds and use them for purchases, bill payments, and money orders, functioning like a debit card without a credit check. Electronic payment services like Zelle, PayPal, and Venmo provide digital alternatives for sending money. Zelle facilitates free, immediate bank-to-bank transfers, while PayPal and Venmo may charge fees if funded by a credit card, though transfers from a bank account or balance are free.

For larger or more formal transactions, bank transfers (ACH transfers) or wire transfers are available. ACH transfers are inexpensive, often free, but take one to three business days to process. Wire transfers offer faster processing, completing within the same day, but come with higher fees, ranging from $15 to $50 for domestic transfers and $30 to $80 for international ones. Additionally, cashier’s checks, issued by banks, serve as a secure, guaranteed payment method for larger amounts, often preferred over money orders for significant transactions.