I. Introduction
If you need to send money to someone far away, you might be wondering about the best payment options. Bank drafts, wire transfers, or cashier’s checks can be pricey. A money order is often an affordable and convenient alternative. But can you use a credit card for a money order? And is it a good idea? In this article, we’ll examine the pros and cons of using a credit card for money orders so you can make an informed decision.
II. Everything You Need to Know About Using a Credit Card for Money Orders
Using a credit card for a money order is possible. You can buy a money order the same way you would if you were paying cash, but instead, you give the vendor your credit card information. Before you go charging off to buy your money order, note that not all money order providers allow credit card purchases. You’ll need to make sure that the vendor accepts credit cards first. It’s also important to be aware of the fees.
Many stores and vendors that offer money orders also charge extra fees for processing credit card transactions. Store-specific credit cards or cashback rewards credit cards may offer a smaller fee or even waive it altogether for purchases at certain locations. Online services such as Western Union and MoneyGram also allow credit card transactions, although their fees are typically higher than those at a retail location.
III. The Pros and Cons of Using Credit Cards for Money Orders
With the flexibility of credit card payments comes a range of pros and cons. Some of the advantages of using your credit card for a money order include:
- Greater flexibility to pay your bills, even if you are short on cash or if your funds haven’t cleared your account yet.
- Increased convenience – you can buy money orders at various locations instead of having to go to the bank or post office.
- The ability to rack up rewards points or cashback on your purchases, which can add up over time.
That being said, there are also downsides to using a credit card for money orders, including:
- Higher fees and interest rates than other payment methods.
- The potential to incur more debt if you don’t pay off your balance promptly.
- The possibility of incurring cash advance fees, which can be costly.
IV. The Do’s and Don’ts of Using Your Credit Card for Money Orders
If you decide to use your credit card for a money order, it’s essential to exercise some smart shopping practices. Here are some best practices to keep in mind:
- Do review your credit card’s terms and conditions to ensure that you understand the fees and interest rates for cash advances.
- Do use a rewards credit card if possible to earn rewards points or cashback on the purchase.
- Do ensure that you have the funds to cover the payment when your credit card bill comes due.
- Don’t use your credit card for money orders to borrow money you can’t afford to pay back or to overcome a savings shortfall.
- Don’t use your credit card for multiple money orders to avoid going over your credit limit, or you could incur over-limit fees.
V. Maximizing Your Credit Card Rewards with Money Orders
If you’re an experienced credit card user, you’re probably familiar with the benefits of credit card rewards programs. Some credit cards offer significant cashback, airline miles, or hotel points incentives when you use them to make purchases. Naturally, you’d want to maximize those rewards when buying money orders, too.
One of the best ways to maximize your rewards is to pay attention to the fees associated with the purchase of money orders. If you can find a vendor that charges low or no processing fees for credit card payments, you may be able to earn more rewards. Additionally, if you have a rewards credit card, check the current promotions and discounts on offer for participating vendors. In some cases, you may be able to earn a bonus or a higher cashback percentage for purchases.
VI. Is Using a Credit Card for Money Orders Safe?
There are some risks associated with using credit cards for money orders, and it’s essential to take steps to minimize those risks. Fraudsters often target credit card users, so be aware of the fraud risks and how to minimize them.
Some tips to reduce the risks associated with using credit cards for money orders include:
- Avoid buying money orders from questionable establishments or individuals you don’t know.
- Monitor your credit card statements for suspicious activity, such as unauthorized transactions.
- Use a secure payment method, such as a chip card or digital wallet whenever possible to protect your credit card information.
VII. How Using a Credit Card for Money Orders Affects Your Credit
Using a credit card for money orders can impact your credit score, but not necessarily in a negative way. If you use your credit card responsibly and pay off your balance on time, your credit score may improve, thanks to the on-time payments and the reduced credit utilization ratio. However, if you fall behind on payments or rack up too much debt, your credit score could suffer. In addition, cash advances typically have higher interest rates than regular credit card purchases, which can make it harder to pay off your balance and thus negatively affect your credit score.
VIII. Alternatives to Using a Credit Card for Money Orders
If you’ve weighed up the pros and cons of using a credit card for money orders and decided that it’s not the right option for you, or if you’re looking for lower costs, here are some alternatives to consider:
- Banks may offer customers the option to purchase a money order from their account for a low fee or even for free in some instances, depending on the account type
- Cashier’s checks may be used when you need higher dollar amounts. While the check will cost you a fee to purchase and sign for, you don’t have to worry about the same kind of tracking fees as a money order.
- PayPal, Venmo, Cash App, and other mobile payment apps are increasing in popularity and may be an affordable option for many people. Transactions made between two users on the same platform are generally free, and fees are modest in comparison to other options.
IX. Conclusion
Using a credit card for money orders might seem like a good idea at first, especially if you’re in a bind and don’t have the cash on hand. However, the high fees and interest rates, the potential credit score impact, and the risk of falling into debt make it a less than ideal option for many people. The key takeaway is to prioritize responsible spending habits, know the terms and fees associated with your credit card, and research all your payment options before making a choice.
