Fees: $0.22-0.75 per $1,000 (although this varies as well)
Where to buy: Walmart MoneyCenter
How to Cash Out: Bank deposit, bill pay at bank branch
Though money orders can be purchased at your local Safeway, Kmart and other retailers, not every place will accept debit cards for these purchases. The Walmart MoneyCenter is a tried and tested source for money orders that can be purchased with PIN-enabled gift cards.
Once you get over the fact that you have to park your car in another city, spend 10-20 minutes in a line where the slowest cashier works the register while three other employees stand around doing nothing, it pays off.
When you finally make it to the front of the line, simply tell them you want to purchase a money order, specify the amount, and swipe your debit or gift card when prompted. Money orders can only be purchased with PIN-enabled cards, so, unfortunately, American Express gift cards are ineligible. Vanilla Visa gift cards generally can’t be used to purchase Walmart money orders either. Your safest bet are GiftCardMall branded Visa gift cards sold at office supply or grocery stores. There are two scenarios in which money orders come in handy:
A cheap way to generate miles
If you have a mile-earning debit card, buying money orders is a cheap way to earn miles. Recently, the Alaska debit card was discontinued, so the only mile-earning debit card left is the UFB Direct check card, which earns 1 AAdvantage mile per $3 spent.
If you try to purchase more than $3,000 worth of money orders, the cashier will pull out a giant binder and record all the information listed on your driver’s license, along with the purchase amount. You don’t want that to happen, so keep your purchases at $2,950 to be safe.
Instead, walk into a local bank branch (i.e. Citi, Chase, Bank of America, U.S. Bank) and use the money orders to pay off your credit card. If your mortgage is with one of these banks, you can pay that as well. If you have a secondary bank account, depositing a few thousand dollars in money orders each month should be ok.
A cheap way to cash out prepaid cards
As I demonstrated throughout the series, money orders are a cheap way to cash out prepaid cards that have been loaded with a mile-earning credit card. For example, if you’re buying Visa gift cards through a shopping portal like TopCashBack or Extrabux, unloading them via Walmart money orders is cheap and there are no monthly maximums. [Update 4/9: TopCashBack is no longer offering cash back on Visa gift cards.]
Since Visa gift cards purchased at drug and grocery stores come in $500 increments and money orders come in $1,000 increments, you can buy a single money order and split the payment between the two cards. This will cut your unloading cost in half.
Disclosure: I will earn a $10 referral fee if you register using the TopCashBack link in this post, along with $5 from Extrabux after your first purchase. You’ll earn $5 just for signing up. Extrabux pays out additional commission when users who signed up with my link use the portal. Please feel free to include your own referral links in the comment section.
Risk and tips
As far as risk, if you do everything in moderation, you will be fine. If you’re using a mile-earning debit card, I would keep money order purchases under $10,000 per month to avoid suspicion. Even if you are buying less than $3,000 at a time. Go overboard and you’ll get your accounts shut down.
As for cashing out Visa gift cards, just make sure your local Walmart doesn’t suddenly wise up and wonder why you’re buying so many money orders. I think of Walmart like a government office. Everything moves at snail pace and most employees don’t do more work than they have to. So I doubt you’ll encounter problems, but as a rule of thumb, it’s best to fly under the radar.