Can You Purchase a Gift Card With a Credit Card?

The ability to purchase a gift card with a credit card is not universally straightforward. Various factors influence whether a credit card can be used for this type of transaction. The outcome depends on the specific merchant’s policies, the type of gift card being purchased, and the credit card issuer’s terms and conditions. Understanding these nuances helps consumers make informed decisions regarding gift card acquisitions.

General Availability of Gift Card Purchases with Credit Cards

Many retailers commonly permit the purchase of gift cards with a credit card. This is often the case for store-specific gift cards, also known as closed-loop gift cards, which can only be redeemed at the issuing merchant. These include cards from clothing stores, restaurants, or electronics retailers. Consumers can typically buy these cards both in physical stores and through online platforms using a credit card.

General-purpose gift cards, often referred to as open-loop gift cards, are also frequently available for credit card purchase. These cards, branded by major payment networks like Visa, Mastercard, or American Express, function similarly to debit cards and can be used wherever the network is accepted. While these universal cards might sometimes incur small activation fees, many supermarkets, pharmacies, and department stores accept credit cards for their purchase. This widespread acceptance allows consumers flexibility in how they acquire gift cards for various gifting or personal use needs.

When Credit Card Purchases are Restricted

Despite the general availability, there are situations where using a credit card for gift card purchases faces restrictions. A significant limitation stems from credit card issuers categorizing such transactions, particularly for general-purpose gift cards or high-value amounts, as a “cash advance.” A cash advance is treated as a short-term loan rather than a standard purchase, leading to immediate interest accrual, often at a higher rate than regular purchases, and typically includes a cash advance fee, which can be a percentage of the transaction amount, commonly 3% to 5%. This classification prevents consumers from bypassing cash advance fees by purchasing gift cards and then converting them to cash.

Retailers also implement their own policies that may limit or prohibit credit card use for gift card purchases. These restrictions can be in place to prevent fraud, manage high credit card processing fees associated with what they consider cash equivalents, or comply with internal risk management protocols. Some grocery stores or pharmacies, for instance, might have strict limits on the number or value of gift cards that can be bought with a credit card, or may only accept debit or cash for these transactions. Additionally, both retailers and credit card issuers may impose daily or per-transaction purchase limits on gift cards, regardless of the payment method.

Financial Considerations for Gift Card Purchases

When acquiring gift cards with a credit card, consumers can often earn credit card rewards, such as points, miles, or cashback, on these purchases. This potential for rewards is a common motivation for using a credit card, treating the gift card acquisition as a standard retail transaction. However, it is important to note that if a transaction is classified as a cash advance by the credit card issuer, it will generally not earn any rewards. Therefore, checking the credit card’s terms and conditions beforehand is advisable to understand the specific policy regarding gift card purchases.

Beyond potential cash advance fees, gift cards themselves may carry activation or purchase fees, which are separate from any credit card charges. These fees, typically ranging from $2.95 to $6.95 for general-purpose cards, are added to the face value of the card and apply irrespective of the payment method used. Furthermore, making large gift card purchases with a credit card can impact one’s credit utilization ratio, which is the amount of credit used compared to the total available credit. An increased utilization ratio, especially if not promptly paid down, can temporarily affect credit scores. Consumers should review their credit card agreement or contact their issuer to clarify potential cash advance policies and any associated costs before making gift card purchases.