When you’re shopping for gift cards—either for your own use or for someone else—it’s nice to be able to pay for them with your credit card, both because it’s easy and because it’s a way to earn credit card rewards.
But is it always possible to buy a gift card with a credit card, or is it sometimes prohibited?
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Can you pay for a gift card with a credit card?
It’s usually possible to pay for a gift card with a credit card—but not all of the time.
When you try to buy a gift card this way, there are two companies that have to be okay with it:
- The retailer selling the gift card
- Your credit card issuer
Most of the time, both companies will allow it, but some do place restrictions on this type of transaction.
Why some retailers restrict buying gift cards on credit
A minority of stores only allow customers to buy gift cards with cash, and never with credit of any type.
Stores have these policies because they’re worried about fraud. Criminals sometimes buy gift cards using stolen credit cards, which lets them replace a payment method that’s dangerous to use (somebody else’s credit card) with one that’s anonymous and untraceable (prepaid gift cards).
To clamp down on this and protect legitimate customers, a few retailers have decided to ban this type of transaction completely.
How to tell if a store will accept credit card payments for gift cards
It can be hard to predict whether a store will let you buy gift cards with credit or not. Companies don’t always widely advertise their policies on this, and individual outlets don’t always follow their corporate policies perfectly.
For instance, the Wall Street Journal reported in 2016 that some Safeway outlets were only accepting cash for gift cards, but that this policy wasn’t being universally followed. 1 Several sources have also claimed that the supermarket chain Harris Teeter does not allow credit card payments for gift cards, but Harris Teeter contradicts this on their website. 2
In general, these policies are relatively rare; most retailers will let you buy a gift card with your credit card. However, if a store doesn’t clearly state their policy on their website, you can always call them and ask.
Why credit card issuers sometimes restrict gift card purchases
Even if the store you want to buy from will let you use your credit card, your card issuer might have a problem with it. That’s because some people buy gift cards specifically to reach their credit card spending thresholds and earn rewards, which card issuers frown on.
To see how this works, let’s say your card offers cash back on the first $1,000 you spend each year, but your total purchases so far only total $700. You can make up the difference by buying a prepaid gift card worth $300. You’ll receive the maximum cash back you’re eligible for, and you’ll still be able to spend the $300 later.
Manufactured spending
Again, many credit card issuers disapprove of this practice. They see it as “manufactured spending”—using your card just to get rewards instead of making legitimate purchases.
It’s possible that, to discourage this, your issuer will restrict how much you’re allowed to spend on gift cards. They might also exempt gift card purchases from rewards, or treat them as credit card cash advances, in which case you’ll probably have to pay a higher interest rate on the transaction.
To find out if your card has any of these restrictions, check your credit card terms of service or just call your credit card company and ask them about it.
The key takeaway: Most of the time, you can buy a gift card with a credit card. However, a few stores prohibit it, and you should check with your credit card company to make sure it’s okay.
Advantages of buying gift cards with a credit card
If your card issuer allows it, buying gift cards with a credit card comes with several perks.
Maximizing your rewards
If you have a rewards credit card, you may be able to game the system with gift cards and maximize your rewards. There are two ways you can do this:
- Reaching your rewards limit: As mentioned, some people use gift cards to meet their credit card rewards thresholds without actually making real purchases There’s a chance your card issuer prohibits this, but if they don’t, it can be a good way to earn the maximum possible rewards.
- Targeting your spending: If your card offers different rewards tiers—different levels of rewards for different types of purchases—you may be able to use gift cards to concentrate your spending in the most lucrative tiers.
How to target your spending with a gift card
This second method requires a little explaining. Imagine that your card offers 5% cash back on grocery store purchases and just 2% on restaurant meals. Let’s say you don’t actually buy groceries that often, but you eat out several times per week—you’d prefer your rewards categories were flipped.
To get around this, you can use your credit card at the grocery store to buy a gift card for your favorite restaurant. You’ll receive the full 5% cash back for your purchase, whereas you’d have just gotten 2% if you used your credit card at the restaurant itself, but you can actually spend the money in the place that you prefer.
This trick is a great way to get the most out of a rewards card. Just make sure that it doesn’t violate any of your credit card’s policies.
Other reasons to buy gift cards with a credit card
Using your credit card to pay for gift cards also comes with several other benefits. These are essentially the same reasons to use a credit card to make any purchase:
- Convenience: Buying gift cards with a credit card is more convenient than paying in cash. If you’re doing your holiday shopping and you need to buy $500 worth of gift cards, it would be a hassle to carry that with you in your wallet. Even if you used a debit card, you’d still have to check whether you had enough money in your checking account.
- Safety: Carrying a credit card is also safer than carrying cash, and it’s harder for criminals and identity thieves to use than a debit card (since it’s easier to challenge fraudulent credit card transactions).
- Builds credit: Using a gift card won’t affect your credit score (even if it’s issued by a credit card company, like Visa or Mastercard). However, buying one with your credit card will build your credit, provided you pay off the purchase promptly and in full.
In general, whether you’re in the market for a gift card because you want to maximize your rewards or just because you genuinely need a gift for somebody, you’ll probably be able to get one with your credit card. Just check the retailer’s policies and your credit card terms before you try to buy it.
