Gift cards are an easy go-to when buying a present for someone. Tossing one in your cart during a trip to the grocery store is about as straightforward as it gets. Of course, you can pay for it with a debit card. But if you use a good rewards credit card, you can also earn cash back or points. That noted, some credit card issuers classify a gift card purchase as a cash advance, making it subject to a fee and high interest rate. Here’s everything you need to know about buying a gift card with a credit card.
How to purchase a gift card with a credit card
Purchasing a gift card with a credit card is simple. When you buy a gift card in person, you need to choose credit as your payment method at checkout. When you buy a gift card online, you need to add the gift card to your online cart and complete the payment page as usual.
Does purchasing a gift card count as a cash advance?
You should be able to use your credit card to purchase most types of gift cards without any issues. In some cases, however, retailers and credit card issuers may limit the use of a credit card for purchasing gift cards. This could involve a spending cap or maximum number of gift cards, or rules pertaining to reloading a prepaid card (also known as a prepaid debit card, reloadable or stored-value card).
A prepaid card is a type of card that you pay for in advance and which is not linked to a credit or debit account. Some credit cards may allow you to reload a prepaid card using a credit card -- but you are likely to be charged fees and a high interest rate for the transaction. Similarly, you may be able to take a cash advance and use the proceeds to reload a prepaid card; that will also likely result in high fees and interest rates. As such, reloading a prepaid card with a credit card is not recommended.
Reasons to buy a gift card with a credit card
You can earn cash back or points on your gift card purchase if you have the right rewards credit card. And some credit cards offer higher cashback rates in quarterly rotating bonus categories like grocery stores, gas stations, Amazon.com, Paypal purchases and home improvement stores -- all of which generally sell gift cards. The timing of these categories may not align with your shopping plans, but buying gift cards in a quarterly bonus category can be an easy way to expand bonus category purchases and maximize rewards on purchases you were going to make anyway.
Should I buy a gift card with a credit card?
To be on the safe side, review your card’s terms and conditions. Most credit cards will let you earn rewards on gift card purchases -- but not in every case, and some may explicitly exclude gift cards from earning rewards.
The bottom line
Buying a gift card with your credit card can be a great way to earn rewards or maximize a bonus category. Most merchants allow you to purchase gift cards with a credit card, but read your card’s fine print to ensure your card’s reward structure applies to gift card purchases.
Correction, 7:30 a.m. PT Jan. 25: An earlier version of this article suggested that buying a prepaid card with a credit card could be “coded” as a cash advance. The article has been corrected to clarify that retailers and credit card issuers may limit the use of a credit card for purchasing gift cards. This could involve a spending cap or maximum number of gift cards, or rules pertaining to reloading a prepaid card. Some credit cards may allow you to reload a prepaid card using a credit card -- but you are likely to be charged fees and a high interest rate for the transaction.
