Although most retailers and sellers now accept credit cards, you may still run into some situations where you need to pay with a money order. This is common for certain online sellers, hand-crafted items, and in some cases, rental properties. Typically, these places require that you pay via a bank account or cash. Although paying for a money order with a credit card is occasionally possible, it isn’t recommended. Although you can, here’s why you might not want to buy a money order with a credit card.
Money Orders = Cash Advance
Although you may differentiate a money order from a cash advance in your mind, the truth is that most banks and credit card companies view purchasing money orders with credit cards as a form of a cash advance. Theoretically, you could buy yourself a money order and then cash it anyway.
Unfortunately, this cash advances result in a higher interest rate or fee from most providers. In fact, depending on your credit card company, you may even find that you pay more for money order purchases than simple ATM withdrawals.
You can expect to pay the average credit card provider as much as 22% in interest plus a cash advance fee (usually greater of $10 or 5%) each time you purchase a money order.
As you can see, if your money order purchase is considered a cash advance, it’s going to cost you a lot more than just the amount of the money order.
Companies That Don’t Accept Credit Cards
To complicate matters further, not every company accepts credit cards when purchasing money orders. Walmart, MoneyGram, USPS, and Moneytree all refuse credit card payments, instead requesting debit or cash payments on the spot for the most part. Some MoneyGram locations may offer credit card payments, but this differs location to location and shouldn’t be considered reliable.
So, in short, you can use a credit card to purchase a money order with certain retailers if you are in a pinch. However, it isn’t recommended simply because of the higher interest rate and expenses associated with the purchase.