Can You Get a Gift Card With a Credit Card?

It is generally possible to purchase gift cards using a credit card, but understanding the associated conditions and potential costs is important. This practice, while convenient, can involve specific retailer policies, various types of gift cards, and financial implications such as cash advances or additional fees. Consumers should be aware of these factors to make informed decisions and avoid unexpected charges or restrictions.

General Policy on Purchasing Gift Cards

Purchasing gift cards with a credit card is a widely accepted practice across many retail environments. Consumers often use credit cards for convenience and to earn rewards. Retailers benefit from increased sales and the security of credit card transactions compared to cash. This process typically applies to most store-specific gift cards.

Retailers often view gift card sales as a form of revenue generation, and accepting credit cards for these purchases aligns with modern payment trends. The security offered by credit card transactions, compared to handling large amounts of cash, is another advantage for businesses. This straightforward process applies to most store-specific gift cards, making them a common item to buy with credit.

Situations That Limit Credit Card Use

Despite general acceptance, specific circumstances can limit or prohibit using a credit card for gift card purchases. These limitations often arise from retailer policies, the type of gift card being purchased, or rules set by credit card networks and issuers. Understanding these nuances helps prevent unexpected issues at the point of sale.

Some retailers, particularly large chains like big-box stores or grocery stores, implement policies that restrict or cap the amount of gift cards that can be bought with a credit card. These measures are frequently put in place to deter fraud and money laundering activities. Such retailers might also be wary of transactions that could be interpreted as cash advances, which carry different processing terms.

The type of gift card significantly influences whether a credit card purchase is allowed. Store-specific gift cards, redeemable only at a particular merchant, are typically treated as standard merchandise. In contrast, open-loop prepaid debit cards, like Visa or Mastercard, function more like cash. Their near-cash equivalency makes them a higher risk for credit card issuers, leading to more restrictions or special handling. Credit card issuers or networks may also have internal policies that flag or restrict certain gift card purchases.

Cash Advance Implications

A cash advance is a transaction where a credit card holder borrows cash against their credit limit, differing from a regular purchase. Certain gift card purchases, particularly open-loop prepaid debit cards, can be categorized as cash advances by credit card issuers. This classification occurs because the liquidity of these gift cards makes the transaction akin to withdrawing cash.

When a gift card purchase is treated as a cash advance, it triggers distinct financial consequences. An immediate cash advance fee is typically applied, which can range from 3% to 5% of the transaction amount, or a flat minimum fee, often around $10, whichever is greater. Furthermore, cash advances usually accrue interest at a higher annual percentage rate (APR) than standard purchases, with rates often ranging from 20% to 30% or more, compared to average purchase APRs around 20%. Unlike regular credit card purchases, cash advances generally do not have a grace period, meaning interest begins to accrue immediately from the transaction date, leading to higher overall costs if not repaid quickly.

Other Purchase-Related Fees

Beyond potential cash advance fees, other charges may apply when purchasing gift cards. These fees are typically imposed by the gift card issuer or retailer and add to the total cost.

One common charge is an activation fee, often applied to open-loop prepaid debit cards, like Visa or Mastercard gift cards. These fees generally range from $2.95 to $6.95, depending on the card’s value, and are charged at the time of purchase to cover activation costs. Store-specific gift cards typically do not carry activation fees. Additionally, some gift cards, particularly open-loop options, may have other flat fees or percentage-based fees added to the total cost at checkout, regardless of the payment method used. These fees contribute to the overall expense of acquiring the gift card.