What Is a Money Order and How Does It Work?
A money order is a paper payment that functions similarly to a personal check. People who want additional protection and tracing use money orders as a check or cash substitute.
You purchase a money order by handing over cash or other guaranteed assets to a cashier (along with a service fee). They print the order, (you) fill it up, and send or give it to whomever you're doing business with.
How Does a Money Order Work?
There are two ways to look at how money orders work, first, how they work if you're sending them, and second, how they work for someone receiving them.
When you send a money order, you're essentially prepaying for the amount of money that you want to send. To do this, you'll need to go to a place that sells money orders and fill one out. This will usually be a post office, but there are also other locations like banks, grocery stores, and check-cashing stores.
You'll need to specify the amount of money you want to send and the recipient's name and address. You'll also need to sign the money order. Once you've done all this, you can mail the money order just like a regular letter.
Keep the receipt and any other information relating to your purchase. If an issue arises, it'll be helpful to have this information to trace or cancel the money order if necessary.
The process is slightly different if you're receiving a money order. In this case, you won't need to do anything in advance. Instead, you'll wait for the money order to arrive in the mail.
Once it does, you can take it to a bank or check-cashing store and cash it just like a personal check. You may need to show ID when cashing a money order, so bring your driver's license or passport.
As with any other form of payment, it's always a good idea to double-check that the money order is for the correct amount before cashing it.
Where Can You Buy Money Orders With Credit Card?
Although credit cards are great for regular purchases, purchasing a money order with one is unlikely to be an option. Most businesses or merchants do not accept credit card purchases or money orders, so using cash or a debit card is always preferable.
If a shop accepts money orders with a credit card, remember that many credit card companies consider money order purchases to be cash advances. A cash advance is a loan you can take from the credit line on your credit card. However, there are various drawbacks to cash advances:
- They are more expensive than regular purchases.
- They typically do not contribute to prizes, welcome bonuses, or other points.
- You, as a cardholder, risk increasing your credit use rate.
- Paying the minimum sum per month may not qualify for a cash advance.
Knowing all this, it's always best to check with your specific credit card company and merchant ahead of time to avoid unwanted fees or charges.
Can I Buy Travelers Checks With a Credit Card?
Yes, you can buy travelers' checks with a credit card. You can also buy them with cash or debit cards. However, there are fees associated with all of these methods of purchase. For example, the price for buying travelers' checks with a credit card is usually 1–3%. So it's essential to weigh the cost of the fee against the benefits of using traveler's checks.
We have ranked the best credit card for travel insurance if you are interested in saving money when traveling and meeting with complications like baggage delays, medical emergencies, or flight cancelation.
How to Use Money Orders Wisely?
A money order is a convenient and affordable way to send money, but it's essential to use them wisely. Here are some tips:
- Confirm the recipient's name and address before sending the money order. This will help ensure that the money order arrives at its intended destination.
- If you're sending a money order internationally, be aware of any currency conversion fees that may apply.
- Keep your receipt until you know the money order has been received and cashed. This will provide you with a transaction record in case of any problems.
Following these simple tips ensures that your money order arrives safely and securely at its destination.
Some Credit Card-Friendly Money Order Alternatives
If you're looking for a convenient way to pay your bills or send money to friends and family, consider using a money order. However, if you need the cash on hand to cover the money order's cost, you may wonder if there are any credit card-friendly alternatives.
Here are a few options to consider:
1. Utility bills: Many utility companies will accept credit card payments. This can be a convenient option if you need more cash to cover the money order cost. Again, you can use Plastiq for this specific purpose.
2. Credit card bills: This can be a good option if you're trying to avoid interest charges on your money order. You may pay one credit card bill with another using a third-party service such as Plastiq. However, there may be costs associated with this.
3. Rent payments: Some landlords accept credit card rent payments. This can be a good option if you're trying to avoid late fees. Some services that make this possible are RentPayment, PlacePay, RentTrack, and ClickPay. Of course, you can also use the already familiar apps PayPal and Venmo.
4. Sending money to friends and family: There are a few options available if you're looking to send money to someone without using a money order, like PayPal, Google Wallet, and Venmo. Another option is to use a prepaid debit card.
5. Online shopping on eBay and Etsy is an easy way to avoid using a money order. PayPal is the easiest way to pay for things on these online marketplaces, especially eBay. PayPal was once linked to eBay, so the two have a lot of integrated features.
As you can see, many credit card-friendly options are available if you want to avoid using a money order. However, it's essential to remember that some of these options may come with fees. So be sure to compare the costs and benefits of each option before making a decision.
Bottom Line
Knowing the conditions and fees associated with using your credit card for a money order, you can pay bills or send money to someone without worrying about the different expenses of each payment method. Available in various places, money ordering that way may be convenient and the right option.
