Where Can I Buy a Money Order With a Credit Card?

Money orders are a secure payment method often used when cash is not advisable and personal checks are not accepted. They function as a prepaid, guaranteed form of payment, much like a check, but they cannot “bounce” due to insufficient funds. Many people explore purchasing them with credit cards, a common query that involves understanding specific financial classifications and merchant policies.

Credit Card Classification for Money Orders

Credit card networks and issuers generally categorize money order purchases as “cash advances” rather than standard retail purchases. A cash advance is essentially a short-term loan where you borrow cash against your credit limit, rather than making a purchase for goods or services. This classification is due to the nature of money orders, which are easily convertible to cash, presenting a higher risk for the credit card issuer. This treatment means that such transactions bypass the usual purchase processing and associated benefits.

Credit card companies classify money orders as cash advances because they are seen as a way to obtain cash directly from your credit line. The primary concern for issuers is the immediate liquidity that money orders provide, which poses a greater risk of default or illicit activities like money laundering. This categorization is a critical factor in understanding why many merchants do not accept credit cards for money order purchases.

Merchant Policies for Money Order Purchases

Most locations selling money orders have strict payment policies, generally prohibiting credit cards. The U.S. Postal Service, for instance, only accepts cash or debit cards for money order purchases. Similarly, major retailers like Walmart, which partners with MoneyGram, typically require payment via cash or debit card. This policy is consistent across many grocery stores and check cashing services.

Merchants do not accept credit cards for money orders primarily to prevent facilitating cash advances, which incur higher processing fees and increase fraud risk. Merchants also aim to avoid becoming indirect sources for cash advances, which are costly for consumers and can be subject to misuse. While some money transfer services like Western Union may allow credit cards for sending money, these transactions are also typically processed as cash advances by the credit card issuer. This widespread restriction means direct credit card payments for money orders are rare.

Financial Implications of Credit Card Money Order Transactions

If a money order transaction is processed using a credit card, it generally incurs significant financial costs, as it is treated as a cash advance. Credit card issuers typically charge a cash advance fee, which is often a percentage of the transaction amount, such as 3% to 5%, or a minimum flat fee, like $10, whichever is greater. For example, a $200 cash advance with a 5% fee would cost an additional $10. This fee is typically applied immediately.

Interest rates for cash advances are also frequently higher than those for standard purchases, often ranging from 25% to 30% or more. Unlike regular purchases, interest on cash advances usually begins accruing immediately from the transaction date, without any grace period. Additionally, there are often daily limits on money order purchases, such as a maximum of $1,000 per single money order, though multiple money orders can be purchased up to a daily total limit like $10,000 at locations like the U.S. Postal Service.