Can I Buy Gift Cards With a Credit Card?

Purchasing gift cards with a credit card is generally possible, but involves important considerations regarding how credit card issuers categorize these purchases and their financial implications. While convenient for gifting or managing expenses, understanding these details helps consumers make informed decisions.

General Permissibility and Purchase Locations

Purchasing gift cards with a credit card is widely permitted across numerous retail environments. You can typically find a selection of gift cards at common locations such as grocery stores, department stores, and various online retailers. Many major retailers, including large chains, offer gift cards both in-store and through their websites, accepting credit card payments. Dedicated online gift card platforms also facilitate these purchases.

There are two primary types of gift cards: store-specific (closed-loop) and general-purpose (open-loop). Store-specific cards can only be used at that specific merchant. General-purpose cards, often branded with logos like Visa or Mastercard, function more like debit cards and are accepted wherever that payment network is recognized. While most retailers allow credit card purchases for both types, some might have limits on the number or value of general-purpose gift cards, often due to fraud concerns.

Understanding Credit Card Transaction Types

Credit card transactions are categorized by the issuer as either a standard purchase or a cash advance. This classification is determined by a four-digit Merchant Category Code (MCC) assigned to the business by payment networks like Visa or Mastercard. The MCC identifies the type of goods or services the merchant primarily offers.

When you purchase a gift card directly from a retailer, the transaction is usually processed as a standard purchase, falling under your credit card’s regular purchase terms. However, in certain situations, particularly for large gift card purchases or when buying from specific vendors coded as “cash equivalent” merchants, a credit card issuer might categorize the transaction as a cash advance. This categorization is less common for typical retail gift card purchases but can occur based on the merchant’s MCC or the credit card issuer’s internal policies.

Implications for Your Credit Card Account

The way a gift card purchase is categorized directly affects your credit card account. If treated as a standard purchase, the amount contributes to your credit utilization ratio. Maintaining a lower credit utilization, generally below 30% of your available credit, is advisable for a healthy credit score. Higher balances, even if paid off, can temporarily increase this ratio.

Whether a gift card purchase earns points, miles, or cashback depends on your credit card’s terms. Many credit card issuers exclude gift card purchases, or “cash-like transactions,” from earning rewards, even if the transaction is processed as a standard purchase. Review your card’s rewards agreement for any exclusions.

If a gift card purchase is categorized as a cash advance, higher fees and interest rates apply. Cash advance fees typically range from 3% to 5% of the amount advanced, often with a minimum fee of around $10. Unlike standard purchases, interest on cash advances begins accruing immediately, without a grace period. The Annual Percentage Rate (APR) for cash advances is also frequently higher than the APR for regular purchases.

Large or unusual gift card purchases can trigger fraud alerts from your credit card issuer. Issuers monitor transaction patterns to detect potential fraudulent activity, as gift cards are sometimes used in schemes involving stolen credit cards. Excessive or rapid accumulation of gift cards may lead to your account being flagged, potentially resulting in a temporary freeze or a verification call.