Can I buy gift cards with a credit card?

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Gift cards are an easy gift for almost everyone. You might consider gift cards as a surprise to friends and family, or as a special treat for yourself. You might also consider transferring these purchases to a credit card for rewards.

Can I buy gift cards with a credit card? The short answer is yes, however. In most cases, a credit card can be used to pay for gift card purchases, but you may not get the rewards you expect.

Why use a credit card to buy gift cards? Is this a good idea? We'll discuss all of these below.

Reasons to buy gift cards with a credit card

Collect points for gifts

The most obvious reason you might want to buy a gift card with your credit card is to earn points or cash back for that gift card purchase. Most merchants that sell gift cards allow you to pay for gift card purchases with your credit card.

Expanded bonus categories

Buying gift cards with a credit card can be a great way to “expand” the rewards category. If you've checked out our coverage of 5% credit card rewards, you'll know that there are several credit cards that offer 5% or more at Walmart, Amazon, Target, office supply stores, and more. All of these places sell gift cards, and using them at retailers where you earn 5% can be a great way to increase the rewards you get on your purchases.

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For example, many office supply stores sell Starbucks gift cards. You may earn 1% to 2% back if you buy a Starbucks drink with your credit card, but if you buy a Starbucks gift card from an office supply store, you can earn 5 Chase Ultimate Rewards® points for every $1 you sign with Business Cash ® Credit Card for purchases as this card earns 5% cash back on the first $25,000 on general office supply store purchases and Internet, cable and phone service, and 2% cash back on the first $25,000 on each account anniversary Rebates are spent on combined purchases at gas stations and restaurants in each account anniversary year. Earn 1% cash back on all other purchases.

Take advantage of expected costs

Credit cards like the Chase Freedom Flex℠ and Discover it® Cash Back offer reward tiers that rotate quarterly when you sign up in areas like the hardware store, grocery store, or gas station. Sometimes the timing of these reward categories doesn't align with your planned purchases, or you might just not spend enough money in one of the promotional categories to maximize the $1,500 in bonus rewards on your purchase. Purchasing gift cards can be a smart way to maximize your spend on future purchases and earn extra rewards.

During the year, I will definitely spend at least $1,500 on groceries. So if I buy a grocery gift card when my Discover it® Cash Back card offers 5% cash back on groceries, that means I'm effectively getting 5% cash back on my $1,500 in grocery purchases return. If you plan on doing home improvement projects in the future, by purchasing a Home Improvement Gift Card when the Home Improvement Store has quarterly category bonuses, you can get 5% cash back on those purchases.

Gift cards for anticipated future charges can be especially useful when the card offers a rewards category, but can also be used with cards that have annual limits on reward cash-back categories like American Express' Blue Cash Preferred® Card.

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Another example: In April 2022, one of my Chase credit cards offered a 10% money back promotion on Panera purchases. If you frequently dine at Panera, it may be helpful to purchase a gift card with similar promotional offers to ensure you receive discounts on future Panera purchases.

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Why you don't want to buy a gift card

With all these reasons to buy gift cards with a credit card, why not buy as many gift cards as possible? There are several reasons to be careful when buying gift cards.

First, gift cards tie your funds to a specific retailer. When you buy a gift card, you convert cash that can be used anywhere into a credit card that can only be used at select retailers. This means you have less flexibility in purchasing. If you buy a gift card speculatively, you may pay a higher price to buy something from a retailer to use up the gift card. At worst, if the business associated with the gift card you purchased goes bankrupt, you'll find that you bought a now worthless plastic card.

Second, gift cards do not have the same consumer protections as credit cards, such as B. Limited liability for fraudulent purchases. If someone fraudulently charges your credit card, there's a good chance you won't end up paying the fraudulent charge. Your recourse may be limited if someone maliciously charges your gift card for a purchase. Additionally, using a gift card often means missing out on valuable perks that a credit card might offer, such as discounts. B. Return Protection, Buyer Protection or Extended Warranty.

After all, one of the reasons merchants love gift cards is that they are prone to breakage. Points only represent the number of gift cards that have been purchased but never redeemed. When buying gift cards, make sure you have a plan to track and use them.

Terms and Conditions

Whether you're buying gift cards with your credit card to take advantage of quarterly category bonuses, bonus cashback categories, or limited-time promotions like Amex offers, be sure to read the terms and conditions. Many issuers exclude gift cards or “cash-like transactions” from earning rewards.

For example, the Chase Sapphire Preferred® Card prohibits the accumulation of points on “cash-like transactions.” The American Express® Gold Card specifically states that “Eligible purchases do not include… purchases of gift cards… or purchases of other cash equivalents.” All card rewards programs are subject to their specific terms and conditions, so be sure to read Rewards in Gift Purchases Know your credit card rules before you card.

Terms and enforcement of terms vary by issuer and card. Most credit cards earn rewards through regular purchases of gift cards, but please be aware that violating credit card terms and conditions can result in severe penalties, including card closure and forfeiture of earned rewards.

Bottom line

Purchasing gift cards with a credit card can be a valuable way to add rewards to your otherwise purchased purchases. Strategically using gift card purchases can increase your cash back or transferable point rewards, but make sure you understand the card's terms and conditions before purchasing a gift card.

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