A money order is a traditional paper form of payment that is somewhat similar to a check. Money orders are usually preferred over check or cash when people want an extra bit of traceability and security. Money order is also guaranteed when it comes to its purchase amount whereas a check is not guaranteed, meaning it could bounce if there are insufficient funds in the account.
On the other hand, a money order’s price has to be paid upfront and likewise, the one who it is sent to, can redeem it for cash anywhere. You can buy a money order with cash, check, debit card and other payment methods but when it comes to credit card, you can’t directly buy a money order with a credit card but there are ways around it that allow you to make the purchase, but it might not be worth it after all.
How to Buy a Money Order With a Credit Card
I reiterate again, there’s no way you can directly buy money orders with a credit card. The only way you can do it is indirectly and that’s by getting a cash advance on your credit line and then using it to buy a money order. However, there are three downsides to cash advance.
A lot of credit cards charge a fee of around 3 to 5% on a cash advance transaction. For instance, say your credit card charges a transaction fee of 4%, and you draw a cash advance of $2000, you’d be paying $80 in transaction fee. Not very cost-effective for getting cash out of your credit card, that you could simply get elsewhere.
Most credit cards are charged with a very high APR for cash advances. For some cards, it is as high as 25 or 30%. So coupling a high transaction fee with a high APR, essentially getting cash out of your credit card to buy a money order would not be the most sensible of decisions, to put it politely.
No Grace Period
Most credit card purchases come with a grace period of at-least 21 days between your statement date and due date. If you pay off your balance within this time limit, you would not have to pay any interest over it. However, this is not true for cash advances, and they start accruing interest as soon as you make the transaction.
So while you can pay for a money order through your credit card by getting a cash advance, it makes no sense to do it due to the disadvantages associated with it like high fees, interest rates and no grace periods. Just get your hands on some cold hard cash without using a credit card and buy the money order.
Alternatives to Money Order
If you need a money order for a utility payment, it’s more likely than not that you can pay for that with your credit card, and it’ll certainly be cheaper than getting a money order through a cash advance. On the other hand, if you need a money order for something you can’t buy with your credit card, you could consider getting a loan.
Loans typically have an interest rate around 9%, far lower than the interest you’d be charged on a cash advance, so you could consider getting an unsecured loan if you have a good credit score. However, if your credit score is unimpressive for a credit analyst, you could go for a secured loan where you’d have to deposit a security as collateral in case you fail to pay your debt back.
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