Can You Buy Gift Cards With a Credit Card?

It is generally possible to purchase gift cards using a credit card. This common practice involves several considerations, from how the purchase is processed by the credit card issuer to specific retailer policies. Understanding these aspects helps consumers make informed decisions.

Purchasing Gift Cards with Credit Cards

Purchasing gift cards with a credit card is a common transaction at many retail locations and online platforms, similar to any other credit card purchase. Gift cards typically fall into two main categories: store-specific and general-purpose.

Store-specific gift cards are redeemable only at that merchant or its affiliated brands. General-purpose gift cards, issued by major payment networks like Visa, Mastercard, or American Express, offer more flexibility as they can be used wherever the respective network’s cards are accepted. The purchase process usually involves presenting the credit card at checkout or entering card details online, just like any standard transaction.

Credit Card Account Implications

Purchasing gift cards with a credit card can have specific implications for your credit card account. One significant factor is how the credit card issuer classifies the transaction. Some issuers may categorize gift card purchases, particularly general-purpose gift cards, as cash advances. Cash advances typically incur immediate fees, often a percentage of the transaction amount, and higher interest rates that begin accruing from the transaction date, without a grace period. Review your credit card agreement or contact your issuer to understand their specific policies.

The impact on credit card rewards programs also varies. While some credit cards may allow you to earn rewards, such as points or cash back, on gift card purchases, others may explicitly exclude these transactions from earning rewards or apply different earning rates. Some credit card terms may state that purchases of gift cards or “cash-like transactions” are not eligible for rewards.

Making large gift card purchases can affect your credit utilization ratio, which is the amount of credit you are using compared to your total available credit. A higher utilization ratio can potentially influence your credit score if not managed by paying down the balance promptly. If the credit card balance is not paid in full by the due date, interest will accrue on the outstanding amount, potentially negating any benefits from the purchase.

Retailer and Issuer Restrictions

Both retailers and credit card issuers implement various rules and limitations that can affect purchasing gift cards with a credit card. Some retail stores may restrict or prohibit using a credit card for gift card purchases, especially for general-purpose gift cards or large transaction amounts. These restrictions are often due to concerns about fraud or to manage processing fees on items with lower profit margins.

Credit card companies also employ their own policies and fraud prevention measures. An issuer might flag or decline gift card purchases, particularly those that are unusually large or frequent, suspecting them as potential fraud, money laundering, or attempts to abuse reward programs. These outright denials differ from a transaction being treated as a cash advance, as they prevent the purchase from occurring at all. Both retailers and credit card issuers may impose daily or per-transaction limits on the value or number of gift cards that can be purchased with a credit card. Some specific credit cards, including certain business cards or specialized rewards cards, may have explicit exclusions in their terms that prevent gift card purchases from qualifying for certain benefits or even from being processed.