What Gift Cards Can You Buy With a Credit Card?

Purchasing gift cards with a credit card has become a common practice, offering convenience and flexibility for consumers. Understanding the nuances of these transactions, including the types of gift cards available and the policies governing credit card use for their purchase, can help consumers navigate this process effectively.

Types of Gift Cards and Credit Card Acceptance

Gift cards are broadly categorized into two main types: open-loop and closed-loop. Open-loop gift cards function much like a debit card and are issued by major financial networks, such as Visa, Mastercard, American Express, or Discover. These cards typically feature the network’s logo and can be used for purchases anywhere that accepts that particular payment network.

Consumers can generally purchase open-loop gift cards with a credit card, although some establishments may charge a small purchase fee, often ranging from $2.95 to $6.95, which can vary based on the card’s value.

In contrast, closed-loop gift cards are specific to a single retailer, restaurant, or a select group of affiliated merchants. These cards, such as those for Amazon or Starbucks, can only be redeemed at the issuing brand’s locations or websites.

The acceptance of credit cards for purchasing closed-loop gift cards depends entirely on the individual retailer’s policy. Many large retailers, including grocery stores, department stores, and major online platforms, allow credit card purchases for their own branded gift cards. Some smaller or niche businesses might have restrictions in place.

Retailers and Platforms for Purchasing Gift Cards with Credit Cards

Consumers have several avenues for purchasing gift cards using a credit card, spanning both physical retail locations and various online platforms. Many common physical stores, such as supermarkets, drugstores, and large big-box retailers, offer a wide selection of gift cards and readily accept credit cards as a form of payment.

Online options for purchasing gift cards with a credit card are also extensive. Consumers can buy directly from a retailer’s official website, such as Amazon, Target, or Walmart, where both physical and digital gift cards are available.

Dedicated online gift card marketplaces and aggregators, like eGifter, Gyft, and GiftCards.com, provide a broad array of brands and accept credit card payments. It remains important to verify the accepted payment methods on these platforms, as policies can vary.

Important Considerations for Credit Card Gift Card Purchases

When using a credit card to purchase gift cards, understanding certain financial implications and practical considerations is important. One significant aspect is avoiding a cash advance, which can occur if a credit card issuer classifies a gift card purchase as such. A cash advance is a loan from your credit card line of credit, incurring higher fees and interest rates, often starting immediately without a grace period.

Fees typically range from 3% to 5% of the transaction amount or a minimum of $10, whichever is greater, and the Annual Percentage Rate (APR) for cash advances is usually higher than for regular purchases. While most gift card purchases at retail locations are processed as standard purchases, large transactions or those at certain merchants, particularly financial institutions, might be flagged as cash advances by some issuers. To mitigate this, consumers can check their credit card’s terms and conditions or inquire with the merchant about how the transaction will be coded, often based on their Merchant Category Code (MCC).

Purchasing gift cards with a credit card can also be a strategic way to earn credit card rewards, such as points, miles, or cashback, or to help meet minimum spending requirements for welcome bonuses. Many credit cards offer bonus categories for purchases at specific types of merchants, like grocery stores, where gift card purchases could potentially maximize rewards. However, some credit card programs explicitly exclude gift card purchases from earning rewards, or they may not count towards promotional offers, so reviewing the card’s terms is advisable.

Retailers and credit card issuers may impose limits on gift card purchases, particularly when using a credit card. These limits can vary, with some consumer cards having a maximum value, such as $500, and daily spending limits, like $5,000 per 24 hours, for high-value gift cards. Merchants might also limit the number of gift cards that can be purchased in a single transaction or over a specific period.

Practicing fraud prevention and ensuring security when buying gift cards with a credit card is important. Purchase gift cards only from reputable retailers or their official websites, and inspect physical cards for any signs of tampering, such as scratched-off PINs. Monitoring credit card statements for unauthorized activity after a gift card purchase is also a prudent security measure. Unlike credit card purchases, gift cards typically do not offer the same fraud liability protections, meaning recovery of funds can be difficult if a gift card is lost, stolen, or compromised.