How to Buy and Use Money Orders Safely

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Understanding Money Orders: A Comprehensive Guide

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding money orders. For any mortgage service needs, feel free to call us at 213-732-3074.

What Is a Money Order?

A money order is a secure form of payment that isn’t linked to your checking account. It’s often used by individuals who don’t have a checking account, need to send money overseas, or prefer not to share their checking account or payment app data. Unlike personal checks, money orders don’t contain information that could lead to identity theft. Since you pay for a money order upfront, the recipient is assured that the payment is guaranteed.

Where Can You Buy a Money Order?

You can purchase money orders at various locations, including:

• U.S. post office branches, including military post offices
• Banks and credit unions
• Retail locations such as Walmart, supermarkets, convenience stores, and drugstores
• Check-cashing stores

Typically, money orders must be bought in person. Before visiting a location, inquire about:

• Identification requirements
• Accepted forms of payment
• Limitations on amounts
• Fees, which generally range from less than $1 to $5

Not all locations handle international money orders, so check this if you need to send money internationally.

Can You Pay for a Money Order With a Credit Card?

Generally, you can only use cash or a debit card to buy a money order. In the past, some locations accepted credit card payments, but this is no longer the case. You also can’t use a personal check to buy a money order.

If you don’t have cash on hand, you could get a credit card cash advance and use the cash to purchase a money order. However, this is usually not advisable due to the high costs involved.

Should You Buy a Money Order With a Credit Card?

There are several reasons to avoid using a credit card cash advance to buy a money order:

• The annual percentage rate (APR) for a cash advance is generally much higher than for a purchase.
• There is typically a fee for a cash advance, which can be either a flat rate or a percentage of the amount.
• A cash advance could negatively impact your credit score by increasing your credit utilization ratio.
• Interest on cash advances usually begins accruing immediately, unlike credit card purchases which have a grace period.
• If you already have a balance on your credit card, future payments may go towards your purchase balance before your cash advance balance, making it harder to pay off.

You can find the APR, fees, and other cash advance terms in your credit card agreement or by contacting your credit card issuer.

The Bottom Line

Money orders offer a way to make certain purchases or transfer funds securely. However, there are less cumbersome options such as paying with a check, using a payment app like Zelle, PayPal, or Venmo, or using a wire transfer or online bank transfer. Purchasing a money order with cash won’t affect your credit, but using a credit card could lower your credit score if it increases your credit utilization. Regularly checking your credit report and setting up free credit monitoring can help you spot potential risks and take steps to resolve them.

For any mortgage service needs, O1ne Mortgage is here to help. Call us at 213-732-3074 to speak with one of our experts today!

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