Can You Buy Gift Cards With a Credit Card?
Understand the full scope of purchasing gift cards with a credit card, including the possibilities, implications, and optimal approaches.
It is generally possible to purchase gift cards using a credit card. This method is widely accepted, though specific terms and implications can differ based on the credit card issuer and retailer. Understanding these details is important for consumers.
Understanding the Acceptance of Credit Cards for Gift Card Purchases
Consumers can typically purchase gift cards with a credit card at a wide range of retail locations and online platforms. This broad acceptance makes using a credit card a convenient option. A common motivation is earning credit card rewards, such as points, miles, or cashback. Some individuals also use gift card purchases to help meet minimum spending requirements for credit card sign-up bonuses, maximizing their overall rewards strategy.
Using a credit card for gift card purchases can also assist with managing personal cash flow, allowing consumers to defer payment until their credit card statement is due. Policies regarding gift card purchases can vary by retailer and credit card issuer. Therefore, it is advisable to understand the specific terms and conditions before completing a transaction.
Key Considerations When Using Credit Cards for Gift Cards
Purchasing gift cards with a credit card involves several financial considerations. One significant factor is the potential for a transaction to be classified as a cash advance by the credit card issuer. While buying a gift card directly from a retailer is usually processed as a regular purchase, certain general-purpose gift cards (like Visa, Mastercard, or American Express) may be treated as cash advances. This can trigger immediate fees, often a percentage of the transaction or a flat fee, and higher interest rates that begin accruing immediately without a grace period.
Another consideration involves the fees associated with the gift cards themselves. General-purpose gift cards commonly carry a one-time purchase or activation fee, typically ranging from $2.95 to $6.95. In contrast, store-specific gift cards generally do not incur these initial purchase fees. Some gift cards, especially general-purpose ones, might also have inactivity fees if they remain unused for an extended period.
Credit card reward programs may also have specific exclusions regarding gift card purchases. Many credit card issuers state that gift card purchases do not qualify for earning rewards points, miles, or cashback. Even if a transaction initially appears to earn rewards, issuers can sometimes claw back those rewards if the purchase is later identified as a gift card or cash equivalent. Individual retailers may also impose their own restrictions or limits on gift card purchases made with credit cards.
Large gift card purchases can also impact an individual’s credit utilization ratio, a component of credit scores. A high credit utilization rate can temporarily lower a credit score. Paying off the balance promptly, ideally before the statement closing date, can help mitigate this effect.
Common Purchase Locations for Gift Cards with Credit
Gift cards can be acquired using a credit card at numerous physical retail locations. Grocery stores are a frequent point of purchase, often displaying a wide array of gift cards. Drugstores and large general merchandise retailers, such as Walmart and Target, also sell various gift cards and accept credit card payments. Department stores are another common venue for purchasing brand-specific or third-party options.
Online platforms provide a convenient alternative for buying gift cards with a credit card. Many brand websites offer their own gift cards for direct purchase, often as digital e-gift cards delivered instantly via email. Large online retailers and specialized gift card marketplaces also facilitate these transactions, providing access to a broad selection of physical and digital gift cards.
It is useful to distinguish between two main types of gift cards. Closed-loop gift cards are specific to a single retailer or a defined group of affiliated merchants. These are typically used only at the issuing brand’s physical locations or online store. Open-loop gift cards are backed by major payment networks like Visa, Mastercard, or American Express, functioning similarly to debit cards and accepted wherever that network’s cards are honored. While offering greater flexibility, open-loop cards often come with purchase fees, unlike most closed-loop options.