Can You Buy Gift Cards with a Credit Card?

Gift cards are a popular and convenient gifting option, but have you ever wondered about the implications of buying them with a credit card? This practice can offer benefits like rewards points, but it also comes with potential risks and fees. In this post, we'll explore the ins and outs of purchasing gift cards with credit cards, helping you make informed decisions.

Key takeaways

• Most retailers allow gift card purchases with credit cards without additional fees
• Credit card rewards can often be earned on gift card purchases
• Some credit card issuers may treat gift card purchases as cash advances, incurring fees

The benefits of buying gift cards with credit cards

Many credit cards allow you to earn rewards on gift card purchases. This can be an excellent way to rack up points, miles, or cash back. Some savvy consumers even use this strategy to maximize rewards in bonus categories, like buying retailer gift cards at grocery stores.

Be careful, though - many credit card issuers frown on using a gift card purchasing strategy to rack up points. If you want to employ a strategy like this, make sure that doing so won’t inadvertently result in you getting booted off your card.

Why choose credit over cash?

Using a credit card to buy gift cards offers the same convenience and flexibility as other credit card purchases. You can easily track your spending, and in some cases, you might be able to defer payment until your next billing cycle.

When might gift card purchases cost you more?

Some credit card issuers may treat gift card purchases as cash advances. This can result in:

• Cash advance fees (typically a percentage of the transaction amount)
• Higher interest rates that start accruing immediately
• No grace period for repayment

In some instances, a credit card issuer only treats a gift card purchase as a cash advance if purchased and coded by the retailer individually. Therefore, you might be able to get around the cash advance fee by purchasing the gift cards as part of a larger purchase, like at a grocery store.

Always double-check with your card issuer to make sure this strategy aligns with their terms & service, though!

TuitionHero Tip

Always check your credit card's terms or contact the issuer directly to understand how gift card purchases are treated.

What to watch out for with generic gift cards

While most retailer-specific gift cards don't have activation fees when purchased with a credit card, generic gift cards (like Visa or Mastercard gift cards) often come with activation fees ranging from $2.95 to $6.95, regardless of the payment method.

How do gift cards compare to direct credit card purchases?

It's important to note that gift cards offer fewer consumer protections compared to making purchases directly with a credit card. This means:

• Less recourse in case of fraud or disputes
• No extended warranties or purchase protections that your credit card might offer

What’s more, gift card purchases are a common way for victims to transfer money to online scammers and fraudsters. If you spot a family member buying gift cards in bulk, either with a credit card or cash, make sure to double-check and make sure they’re not falling prey to fraudulent activity.

Why you should be cautious with gift cards

There's always a risk of forgetting about or losing gift cards. Unlike a credit card, which can be easily canceled and replaced, a lost gift card often means lost money.

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Best practices for buying gift cards with credit cards

1. Check your credit card terms: Understand how your issuer treats gift card purchases.
2. Use the right card: Choose a card that offers rewards for gift card purchases.
3. Be aware of limits: Some retailers may limit the number or dollar amount of gift cards you can buy with a credit card.
4. Keep track of your gift cards: Use a tracking app or system to avoid forgetting about your purchased gift cards.
5. Consider the recipient: While convenient for you, make sure a gift card is appropriate and useful for the intended recipient.

Why trust TuitionHero

At TuitionHero, we help you understand how to use credit cards for various things, like buying gift cards. We also offer tools to manage your credit and find student loans, refinancing options, scholarships, and credit cards. Our goal is to make finances simple so you can make smart choices. Let us guide you toward a better financial future.

Frequently asked questions (FAQ)

Can all gift cards be purchased with a credit card?

Most retailers allow gift card purchases with credit cards. However, policies can vary, so it's best to check with the specific retailer or gift card issuer. Some may have restrictions or limits on credit card purchases of gift cards.

Will I always earn rewards when buying gift cards with my credit card?

While many credit cards allow you to earn rewards on gift card purchases, some cards exclude them from earning rewards. It's important to check your specific card's terms and conditions. In some cases, buying gift cards can be a way to maximize rewards in bonus categories.

Are there any credit cards that specifically prohibit buying gift cards?

While most credit cards allow gift card purchases, some may have restrictions or treat them differently. For example, American Express once had a policy against earning rewards on gift card purchases, but this has since changed for most of their cards. Always check your card's current terms and conditions.

How can I avoid cash advance fees when buying gift cards with my credit card?

To avoid cash advance fees, first check if your credit card treats gift card purchases as cash advances. If it does, consider using a different card or payment method. Purchasing gift cards from regular retailers (like grocery stores or department stores) is less likely to be treated as a cash advance compared to buying from financial institutions.

Final thoughts

Buying gift cards with a credit card can be a smart strategy to earn rewards and enjoy convenience, but it's crucial to understand the potential risks and fees involved. By following best practices and staying informed about your credit card's policies, you can make the most of this purchasing option while avoiding pitfalls.

Have you had experiences, positive or negative, with buying gift cards using your credit card? Share your thoughts and tips in the comments below!

Source

1. Can You Buy Gift Cards With a Credit Card? - Experian
2. Can you buy gift cards with a credit card — and should you?
3. Can You Buy Gift Cards With a Credit Card? – Forbes Advisor
4. Can You Buy Gift Cards With a Credit Card? | Chase
5. Can You Buy Gift Cards With a Credit Card? | Capital One
6. Can You Buy Gift Cards With A Credit Card? | Bankrate
7. Can you buy gift cards with a credit card? | CNN Underscored Money
8. Can You Buy Gift Cards With a Credit Card? - NerdWallet