The money order is a payment method that has been around for decades. Sometimes it’s the only way to send money, and many people use them in their daily lives. It’s also an easy way to buy money orders with your credit card! However, certain limitations depending on what type of credit card and where you purchase the money order.
This article will cover money orders: what they are, how they work, and whether or not you can purchase them with your credit card. We will also look at the pros and cons of money orders so that you can decide if this payment method is right for you.
Let’s get started!
- What is a money order and how does it work?
- What types of money orders are there?
- Pros and cons of money orders?
- Can you purchase money orders with credit cards?
- Final Thought
What is a money order, and how does it work?
A money order is a money-transferring document that can send money in the mail. It is usually purchased at your bank, and it works just like a check. The money order has your name on it, along with the recipient’s name and address, as well as the dollar amount you are sending. The money order can be purchased for any amount, and the recipient can cashed at their bank.
A money order is often purchased in advance and guaranteed; this implies the buyer must pay for the money order immediately from a seller or merchant. The purchase should be made to a specific individual or firm that receives the paper and can cash it at a different location—with identification.
For Example, John wants to send money to his cousin. He goes to the bank and requests a money order for $200 from his account. He then provides identification that matches his name on the money order before mailing it out in the mail with a stamp attached. His cousin must cash it at her bank, showing identification with John’s name on it.
What types of money orders are there?
There are two main types of money orders available: the USPS money order and the bank money order.
USPS money order: This type of money order is typically sold at your bank or credit union, as well as some post offices. These are the money orders that are guaranteed by the U.S Postal Service and available in a wide range of amounts. The money order shows the amount, the sender’s name, and a postal money order number.
Bank money order: These money orders can be purchased at banks or credit unions and cashed anywhere that accepts bank money orders. They include security features to prevent fraud. In addition, they require identification when cashing them at another bank location.
Pros and cons of money orders?
There are many reasons money orders make money transfer easier, including:
Pons of money orders:
- A convenient way to send money: money orders require less money than other money-transferring options. A money order can be sent with a stamp and mailed to the recipient, so it is unnecessary to deliver it in person.
- Secure: money orders cannot be altered, and they cannot be fraudulently duplicated, unlike cash. Suppose you want to send money within the USA or internationally. In that case, money orders are usually the safest way to go and one of the most affordable ways to transfer money.
- Reversible: If you change your mind about sending money after purchasing a money order (or if your recipient decides not to claim it), you can cancel the payment and get your money back as long as it has not been deposited or cashed yet. This is not true for personal checks.
- Send money quickly and easily: Money orders can be sent via mail and, as such, money orders allow money to move quickly between people. This is the reason why money orders are often used for money transfer via Western Union or Money Gram because they provide an instant money-transferring option.
- Money orders are useful for many people who don’t have a checking account: If you don’t have a checking account, money orders may be the only way to send money. You can send money anywhere in the United States by purchasing money orders from your bank or credit union.
- Offer anonymity: Money orders can be used to send money anonymously, making them ideal for people who want to keep their money transfers private. With money orders, you don’t need to provide your personal information, such as your full name and address, when you buy one.
- Money orders are widely available: Money orders can be purchased at many different locations in the United States and Canada, including banks, credit unions, and some post offices. As such, they make a convenient way of transferring money if you know where to purchase them.
- You can send money orders internationally: If you send money to another country, you can often buy money orders in U.S. dollars at your local bank or credit union. Money orders may also be available in other currencies, but they may have a limited money amount.
Cons of money orders:
Be aware, though, money orders do have some disadvantages as well.
- Not everyone will accept money orders: Money orders are not accepted everywhere, and therefore they may not be a suitable payment method when you need to pay for something online or with a debit card.
- Identification demanded: Every time you want to cash a money order at a different bank branch, identification must be provided. However, this is not necessary if you use it within the same financial institution where the money order was purchased from. If you purchase a USPS money order at Post Office, ID is required in most cases.
- Non-reversible: money orders cannot be reversed, and the money does not go back on your card unless you cancel it first and receive a refund on your money order. If your money order is cashed after you cancel it, there will be no money to refund.
- Fees: Money orders are not free like money transfers using your bank account or credit card. Purchase money orders with your credit card. There will be fees that come along with the transfer, which means sending money this way can be more expensive than other money-transferring options. Transaction limit: the money order transaction is limited to $1000 (most issuing banks allow higher amounts, but it’s best to check before making any purchases).
- Certain money orders can not be cashed in some locations: While money orders are available in most places, there are certain restrictions on which money orders you can cash with your bank or credit union. In some cases, money orders must have been purchased from the same financial institution where you want to cash them.
Can you purchase money orders with credit cards?
Yes, money orders can be purchased with credit cards, but not all issuers allow money orders to be purchased with a credit card. The 7-Eleven stores and Western Union money allow you money order purchases with credit cards.
Most money order issuers want the money in hand before money orders are issued, so money order issuers often require money to be deposited in advance. For this reason, money orders are not approved with credit card money transfers if the money for the money order is taken out of your credit card balance or the payment method.
Suppose you want to buy money orders with a credit card (or over any amount). In that case, you must contact your issuer to determine if money orders are supported by your issuer. If money orders are approved, you may be required to deposit money in advance or provide additional information before making money order purchases with your credit card.
The money order may be denied due to:
- Exceeding credit limit: If your credit card transaction exceeds the amount of your credit line, then the money order purchase request may be denied by your credit card issuer.
- If money orders are not allowed with your credit card: You may also find that you can not make money order purchases even if money orders are an approved purchase option for your credit card. This is often the case when money order issuers want to verify your identity and/or money order purchasing history and the issuer finds no money order purchases on your credit report.
Pro Tips: A money order purchase may be classified as a cash advance by the credit card company, which has several drawbacks, including higher fees to use money orders.
Suppose your credit card issuer classifies money order purchases as cash advances. In that case, you are likely to pay a transaction fee of 5% to 6% for money order transactions.
While money orders are not accepted everywhere or by everyone. They can be used for money transfers if money orders are supported by the issuer and are allowed with your credit card.
Should I Purchase a Money Order With a Credit Card?
Buying a money order with a credit card is not likely to be a viable option, as most retailers or merchants do not accept money orders using a credit card. It’s always better to opt for cash or a debit card first because most businesses don’t allow credit card purchases of money orders.
However, if you still wish to pay with a credit card for money orders, keep the following points in mind.
#1. Fees for cash advances are higher than those for standard purchases:
You’ll have to pay a money order fee for money orders purchased with credit cards, in addition to the usual transaction fee for credit card purchases.
This is because money orders are usually considered cash advances, not regular purchases. When you use your credit card for money orders, it functions as if you are withdrawing money from an ATM or making a cash advance from a bank, and the fees associated with money orders are higher than those for normal credit card purchases.
#2.Cash advances are rarely eligible for rewards like welcome bonuses or other points.
Most money order and credit card companies do not let you earn money orders and credit card rewards on money orders purchased using a money order or credit card.
It is best to check with your money order or credit card issuer before using your money order or credit card for money order purchases if they have different policies than the norm.
#3. You are in danger of increasing your credit utilization rate.
If you are concerned about your credit utilization rate, money orders are not a good idea.
This is because money order purchases with credit cards increase your total balance, increasing your credit report’s credit utilization rate. You might also trigger alerts for security purposes or be denied additional credit later due to the high utilization rate.
#4. It is possible that making the minimum payment each month will not count towards a cash advance.
Cardholders’ monthly payments may be set by the card issuers at any time. They may submit payments to purchases with a lower interest rate every month. As a result, paying off a cash advance (and the rest of the card’s balance) in the long run becomes more difficult since interest accrues rapidly.
When should I use a money order?
When using cash or personal checks puts you at risk, or they aren’t accepted for payment.
For example, money orders are great for:
- You’ll need to transmit money securely.
- You may have to send money as a part of a legal proceeding or contract.
- There might be a time when you need to pay money into another person’s account (e.g., paying rent).
- You might need to transfer money without revealing the source (e.g., paying for a classified listing).
How can I buy a money order?
You may buy money orders from banks and credit unions and at a variety of locations, including big box retailers, post offices, and even some gas stations. Money orders are a secure alternative to cash or checks. International money orders might be a cost-effective way to send things across borders quickly.
Here are the steps to purchase money orders:
- Look for money order forms. These might be behind the counter at your bank, at the post office (either at the retail counter or available on automated kiosks), or in places like Walgreens, Kmart, grocery stores, and Walmart.
- Fill out money order details, including who and from, how much money is to be transferred, and the money order’s value.
- Pay for a money order with a credit card.
- Keep the receipt: money orders are frequently negotiable instruments, which means that you may have to provide proof of payment to spend money orders issued.
- Make sure the money order has the issuer’s name and address on it as well as a serial number: they might not be valid otherwise.
- Take your money order and I.D. (if required ) to the location where you intend to use it.
- Stamp money orders as ‘cashed‘ once received by the recipient.
Where can I cash a money order?
A money order can be cashed at the issuer’s branch or any other money services business authorized by the money order issuer. However, its best bet is to cash orders at banks or credit unions, likely to have more money order cashing options.
But before choosing one money order issuer over another, look at the money order fee schedule. You will need to check it online or call customer service.
What should I do if money order fees are too high?
If you think money order fees are too expensive, consider a bank account linked with a money order issuer and low-cost checking services. Financial institutions with money order programs often have a checking account with free money order issuance as a service for customers.
When money needs to be sent, it is best to use it if you do not need money orders immediately after opening an account. Otherwise, send money online through TransferWise or Zelle for the lowest fees.
What ID do I need to present when picking up the money order?
The money order issuer will inform you of the I.D. required when you purchase money orders. If money orders look suspicious or are fraudulently reproduced, you might be asked to present identification to pick them up.
What do I do if I lose a money order?
If money orders are lost or stolen before they are cashed, money order issuers will usually replace them for free. However, you must bring your receipt and the money order obtained from the money order issuer.
In most cases, money orders can be replaced if they have not been cashed and money has not been taken out of them. But if a money order is cashed, money order money issuers will not replace it.
What are the money order limits?
Money orders typically have maximum limits around $700 or $1,000, although actual limits depend on the issuer. There are money order limits for money orders at some institutions, but they might be different from those of regular checks. It is important to check with your financial institution on its money order limit policy.
What should I do if money orders look suspicious?
Suppose the money order or check looks like it is fraudulently reproduced or altered in any way. In that case, you should contact the money order issuer immediately to inform them.
Reporting money orders that look suspicious can help money order issuers cancel money orders before they are cashed or stop money orders that were already cashed from being spent.
Can I use a money order in the U.S. if I am not from the U.S.?
Yes! International money orders are available at money order issuers. You can use them in the U.S. to make purchases, pay bills, or cash order money when you visit the country.
However, money orders should be purchased at money order institutions open to the public. For money order issuers, visit your nearest branch or call customer service to verify if it provides international money orders.
Can I buy a money order online?
Yes, money orders can be bought online in most cases. Transaction fees tend to be lower than money orders issued in person, but money order money issuers usually charge money orders more for each $500 or $1,000 money order if it is purchased online.
How do I check the status of a money order?
You can check the money order status by calling money order issuers or by checking your money money money money statement. Some money order issuers let you check the status of a money order online, which is usually free and requires a fee I.D. If necessary.
However, it is important to note that not all money orders can be checked for the same money money money money. Some money orders are only valid for a certain period after purchase, so if they have expired, you might not be able to check their status.
What should I do with money orders before cashing them?
Some money order money issuers do not let you cash orders until a certain number of days after purchase. If money orders expire, the money order money issuer will usually charge for each month the money order has been held before cashing it.
It is important to know when money orders are eligible to be cashed if they have an expiration date and money is taken out of them before money money money money.
Can I send money orders internationally?
Yes, money orders can be sent internationally in some cases. To send money orders internationally, you must know the recipient’s address and follow money order issuer requirements such as sending a required amount of money upfront to cover fees and money money money money.
The recipient must take the money order and cash it at a money institution in their country. Depending on where you send the money order, the issuer might take longer to credit or debit your account than usual.
Yes, it’s possible to purchase a money order with your credit card. However, there are many downsides of doing so which you should consider before making this decision.
For starters, if the funds don’t clear in time or for other reasons the issuer reverses the charge, you’ll be stuck paying back that amount on your bill, and any service fees associated with purchasing said money orders.
Secondly, some issuers may limit how often they allow their customers to use their cards for purchases like these because of potential fraud concerns and security risks involved when using an unsecured payment system such as a credit card online.
The bottom line is that while yes, it is technically possible to buy a money order through your bank account via Visa, Mastercard, etc., the implications of doing so are typically not worth it for most cardholders.
- Shivani is an expert in personal finance who motivates and educates readers to make the most of their financial opportunities. She covers a wide range of topics, from credit cards and banking to travel rewards programs. She has an established presence in the personal finance media industry and has been featured in Prestige Magazine and The My Credit Card Club. Shivani is passionate about understanding money in order to help her readers make responsible and lucrative decisions. From her homebase in New Delhi, Shivani travels the world as a digital nomad, sharing her knowledge and experiences with those seeking to understand their finances better.
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