Can You Buy Gift Cards With Store Credit?

Store credit, often issued for returns or exchanges, represents a balance available for future purchases directly from a retailer. Gift cards offer a convenient way to pay for goods or services. A common question is whether store credit can be used to acquire new gift cards.

Understanding Store Policies for Gift Card Purchases

Generally, purchasing gift cards using store credit is not permitted by most retailers. Store credit typically functions as a direct offset against future merchandise purchases, essentially reducing the amount owed on a transaction. Store credit is a promise from the retailer to deliver goods or services of equivalent value in the future, often documented as a merchandise credit. This credit is usually tied to the retailer’s internal system and intended for direct consumption of their products.

Gift cards, in contrast, represent a different financial instrument. They are often considered a form of “closed-loop” payment, meaning they can only be redeemed at the issuing retailer or a specific group of affiliated stores. When a gift card is sold, the retailer receives cash upfront but records it as a liability on their balance sheet. This liability represents the retailer’s obligation to provide goods or services in the future when the card is redeemed.

While the general rule restricts using store credit for gift card purchases, policies can vary. Some retailers might offer specific exceptions or have nuanced terms for certain types of store credit, such as those earned through loyalty programs or promotional offers. However, these instances are rare, and the default stance among retailers is to disallow such transactions.

Common Reasons for Restrictions

Retailers impose restrictions on purchasing gift cards with store credit due to several business and financial considerations. A primary concern is fraud prevention.

Allowing store credit to be converted into gift cards could facilitate various fraudulent activities, including money laundering, as gift cards can be easily transferred and are often less traceable than other forms of payment. Cybercriminals might exploit such a loophole to convert ill-gotten gains into untraceable gift card balances.

From an accounting perspective, the conversion of store credit into a gift card complicates financial reporting. Store credit typically arises from a return where the original sale was already recognized as revenue.

Issuing a new gift card creates a new liability (deferred revenue) on the balance sheet, as the retailer is now obligated to provide future goods or services for the gift card’s value. This conversion effectively transforms a reduction of a previous transaction into a new, distinct liability, which can obscure accurate financial tracking and revenue recognition.

Retailers also aim to prevent the circumvention of their return policies or the conversion of expiring credit into a more flexible form. Store credit is often designed to encourage continued spending within their specific store, while gift cards can be given away or even resold, potentially bypassing the retailer’s intent for the original credit. Preventing this conversion helps maintain the integrity of their financial controls and reduces potential losses associated with unredeemed credit.

Checking a Specific Store’s Rules

To determine a particular retailer’s policy regarding the use of store credit for gift card purchases, direct inquiry is the most effective approach. Begin by visiting the retailer’s official website. Many companies provide detailed information in their “Frequently Asked Questions” (FAQs) section, terms and conditions, or dedicated gift card policy pages. Look for clear statements addressing the types of payment accepted for gift card purchases and any exclusions.

If the information is not readily available online, contact the retailer’s customer service department. This can typically be done via phone, email, or live chat features often found on their website. When communicating with customer service, clearly state your intent: that you possess store credit and wish to use it to purchase a gift card. Be specific about the type of store credit you hold, such as merchandise credit or a loyalty reward balance.

Another option is to inquire directly at a physical store location. Speak with a manager or a knowledgeable associate at the customer service desk. They should be able to provide accurate information about their store’s specific policies. Always seek a definitive answer to avoid any misunderstanding during a transaction.