Buying gift cards with a credit card can be a convenient and rewarding way to give presents or treat yourself. Whether you’re looking to earn credit card rewards, take advantage of discounts and promotions, or simply enjoy the flexibility of a gift card, using your credit card to make the purchase can offer several benefits. However, it’s important to be aware of the potential limitations and risks involved before swiping your card for a gift card.
Can You Buy Gift Cards With a Credit Card?
Buying Gift Cards With Credit Cards Is Possible
The short answer is yes, you can buy gift cards with a credit card. Most retailers and restaurants that sell gift cards accept credit card payments, both for in-store and online purchases. The process is generally the same as making any other purchase with your credit card – simply present your card at the time of purchase or enter your card information during the online checkout process.
However, it’s important to note that some merchants may have restrictions on purchasing gift cards with credit cards. For example, they may limit the number of gift cards you can buy in a single transaction or require additional identification for credit card purchases. It’s always a good idea to check with the specific merchant or read their gift card purchase policies before making a purchase.
Types of Gift Cards You Can Buy With Credit Cards
There are two main types of gift cards you can purchase with a credit card:
- Open loop gift cards: These are gift cards issued by financial institutions like Visa or Mastercard. They can be used anywhere that accepts those brands, giving the recipient more flexibility in where they can spend the funds. However, these cards may have purchase fees and restrictions on how many cards you can buy at once.
- Store-based gift cards: These gift cards are specific to a particular retailer or restaurant, such as a Target gift card or a Starbucks gift card. They can only be used at that specific merchant, but they often don’t have purchase fees and may offer additional discounts or promotions.
Both types of gift cards can be purchased with a credit card, but it’s important to consider the specific terms and conditions of each card before making a purchase.
Benefits of Buying Gift Cards With Credit Cards
Earning Credit Card Rewards on Gift Card Purchases
One of the main benefits of buying gift cards with a credit card is the ability to earn rewards on your purchase. Many credit cards offer rewards points, cash back, or other perks for everyday purchases, and gift cards are no exception. By using a rewards credit card to buy gift cards, you can essentially double-dip on rewards – earning points or cash back on the gift card purchase itself, and then earning additional rewards when the gift card is used to make a purchase.
For example, if you have a credit card that earns 2% cash back on all purchases, buying a $100 gift card would earn you $2 in cash back rewards. Then, when the gift card is used to make a $100 purchase, you’d earn another $2 in rewards on that transaction. Over time, these rewards can add up to significant savings or valuable perks like free travel or merchandise.
Taking Advantage of Discounts and Promotions
In addition to earning rewards, buying gift cards with a credit card can also help you save money through discounts and promotions. Many retailers offer discounts on gift card purchases during certain times of the year, such as the holiday season or during special promotions. By using your credit card to buy gift cards during these sales, you can save money on your purchase while still earning rewards.
For example, Target often offers a 5% discount on gift card purchases made with a Target RedCard. If you have a RedCard and purchase a $100 Target gift card during one of these promotions, you’d save $5 on the purchase price. Combined with any rewards earned on the purchase, this can add up to significant savings over time.
| Credit Card | Gift Card Promotion | Potential Savings |
|---|---|---|
| Target RedCard | 5% discount on Target gift cards | $5 off a $100 gift card purchase |
| American Express | Amex Offers for specific retailers | Varies by offer, often $5-$20 off a minimum purchase amount |
| Chase Freedom Flex | 5% cash back on quarterly bonus categories, including select retailers | $5 back on a $100 gift card purchase in a bonus category |
Other credit card issuers like American Express also frequently offer discounts on gift card purchases through programs like Amex Offers. By strategically buying gift cards with your credit card during these promotions, you can save money on your purchases while still enjoying the benefits and flexibility of a gift card.
Risks and Limitations of Buying Gift Cards With Credit Cards
Credit Card Issuer Restrictions on Gift Card Purchases
While buying gift cards with a credit card is generally allowed, it’s important to be aware of any restrictions or limitations imposed by your credit card issuer. Some issuers may exclude gift card purchases from earning rewards, or they may limit the number of rewards you can earn on gift card purchases.
For example, the Chase Sapphire Preferred Card specifically prohibits earning points on “cash-like transactions” including gift cards, while the American Express Gold Card excludes purchases of “cash equivalents” like gift cards from earning rewards. Be sure to read your credit card’s terms and conditions carefully to understand any restrictions on gift card purchases.
Additionally, some credit card issuers may code gift card purchases as a cash advance rather than a regular purchase. Cash advances often come with additional fees and start accruing interest immediately at a higher annual percentage rate (APR) than regular purchases. To avoid these fees and interest charges, it’s important to check with your issuer beforehand to see how they categorize gift card purchases.
Lack of Consumer Protections Compared to Credit Cards
Another potential drawback of buying gift cards with a credit card is the lack of consumer protections compared to using a credit card directly. When you make a purchase with a credit card, you’re often entitled to benefits like return protection, purchase protection, and extended warranties. These benefits can provide valuable peace of mind and financial protection if something goes wrong with your purchase.
However, when you buy a gift card with a credit card and then use that gift card to make a purchase, you may forfeit some of these protections. Because the actual purchase was made with a gift card rather than the credit card directly, the credit card issuer may not extend the same protections to that purchase.
| Credit Card Benefit | Description | Applies to Gift Card Purchases? |
|---|---|---|
| Return Protection | Refunds your money if a retailer won’t accept a return within a certain timeframe | No, only applies to purchases made directly with the credit card |
| Purchase Protection | Covers your purchases against damage or theft for a certain period of time | No, only applies to items purchased directly with the credit card |
| Extended Warranty | Extends the original manufacturer’s warranty on eligible purchases | No, only valid for items purchased directly with the credit card |
While gift cards themselves may offer some protections like replacement of lost or stolen cards, these are often more limited in scope than the protections offered by credit cards. It’s important to weigh the potential benefits and drawbacks of buying gift cards with a credit card, and consider whether the rewards and savings are worth the potential loss of consumer protections.
Tips for Buying Gift Cards With Credit Cards
Choose the Right Credit Card for Gift Card Purchases
To maximize the benefits of buying gift cards with a credit card, it’s important to choose the right card for your needs. Consider factors like:
- Rewards earning potential: Look for a credit card that offers high rewards rates on the types of purchases you make most often, including gift cards. Some cards offer bonus rewards on specific categories like grocery stores or gas stations, which could be good options for buying gift cards.
- Promotional offers: Keep an eye out for credit cards with sign-up bonuses or other promotional offers that could help you earn extra rewards or discounts on gift card purchases. For example, a card that offers a $500 bonus after spending $3,000 in the first three months could be a great option if you plan to buy a lot of gift cards during that time.
- Issuer restrictions: As mentioned earlier, some credit card issuers have restrictions on earning rewards for gift card purchases. Be sure to read the terms and conditions carefully and choose a card that allows you to earn rewards on these purchases.
By choosing the right credit card for your gift card purchases, you can maximize your rewards earning potential and take advantage of valuable promotions and discounts.
Keep Track of Gift Card Balances and Expiration Dates
Another important tip when buying gift cards with a credit card is to keep careful track of your gift card balances and expiration dates. While most gift cards don’t expire for at least five years (and some never expire), it’s still a good idea to use them in a timely manner to avoid losing track of the funds.
One way to keep track of your gift card balances is to use a gift card management app or website. These tools allow you to easily see the balance and expiration date of all your gift cards in one place, and some even offer features like balance alerts or the ability to buy, sell, or trade unwanted gift cards.
By staying on top of your gift card balances and expiration dates, you can ensure that you’re using them wisely and not letting the funds go to waste. This is especially important when buying gift cards with a credit card, as you don’t want to end up paying interest on a purchase that you never actually used.
Keep in mind that unused balances on gift cards can be a significant source of revenue for merchants, as they’re able to keep the money from unredeemed cards. This is known as “breakage” in the industry. By using your gift cards in a timely manner, you can avoid contributing to this phenomenon and ensure that you’re getting the full value of your purchase.
See also:
- Best Credit Cards with Velocity Points – Compare & Save
- Is it Safe to Use Debit Card on Amazon? – Exploring Safety and Security
- How to Add Money to Apple Pay: Step-by-Step Guide
- How to Add Money to Microsoft Account – Step by Step Guide
- Credit Cards with $5,000 Limit Guaranteed Approval – Best Options 2024
