It’s difficult to find the perfect gift for that milestone birthday, wedding, graduation, or another special event, but everyone welcomes a gift card. You’re actually giving the person a personalized shopping experience as opposed to items that may or may not be needed or wanted.
Gift cards can also be used for functional purposes such as paying bills and purchasing items you’d normally be buying with cash or credit.
Purchasing gift cards with your rewards-earning credit card can provide an additional dimension to the transaction — you could earn rewards!
And that’s our topic today. We’re going to explore the possibility of purchasing gift cards with your rewards-earning credit card, the benefits of doing so, and also look at some of the potential downsides to watch out for.
It’s an exciting topic and one we can’t wait to dive into, so let’s get started.
Why Use a Credit Card To Purchase a Gift Card
The primary reason you’d want to purchase gift cards with a credit card is to earn rewards. Whether you’re purchasing the gift card to use as an actual gift, utilizing the gift card to pay your bills, or using the card for purchases you planned to make anyway, earning rewards on the purchase could make the transaction economically desirable.
There may also be incentives to reach certain spending levels on a credit card, such as qualifying for a waiver of annual airline spending requirements or earning a free hotel night.
Although gift cards may count towards spending thresholds on a credit card, we do not recommend buying gift cards to qualify for the spending required to earn a credit card’s welcome bonus as card issuers frown on this practice.
Hot Tip: You won’t be earning additional rewards when you spend your gift card, so be sure to use an online shopping portal like Rakuten to make your purchase in order to receive additional potential earnings. Check out CashBack Monitor to determine which portal is offering the most rewards for your upcoming purchase. You may be able to double-dip and earn rewards both when you purchase your gift card (with your rewards-earning credit card) and when you shop with your gift card.
Types of Gift Cards
Gift cards come in a variety of flavors, including those that can only be used at 1 specific retailer, those that work at multiple stores, and those that are limited to a single payment processing network such as Visa or Mastercard.
Here are a few of the types of gift cards you’ll encounter during your shopping:
Single-Store Gift Cards
Single-store gift cards can only be used at a specific merchant. Examples of single-store gift cards would be those that include a branded label such as a Bed Bath & Beyond gift card, Lowe’s, Applebee’s, Target, etc. These cards are often referred to as closed-loop cards.
Multiple-Store Gift Cards
Multiple-store gift cards come in all sorts of combinations with fun names such as Happy Cards, Spafinder, ChoiceCard, or Giving Good cards. Additionally, you’ll find multi-store gift cards that can be used at a family of partner merchants such as a Sam’s Club gift card that can also be used at Walmart, or a Darden’s gift card that can be used at a variety of restaurants such as Olive Garden, Bahama Breeze, Longhorn Steakhouse, and more.
Single-Category Gift Cards
Category gift cards allow you to make purchases with merchants in a specific category. The Everywhere family of Visa gift cards, for example, has categories such as Fashion, Dining, Fuel, Explore, Groceries, and more.
You can use these gift cards with any participating merchant that sells the items or services in the specific card category.
Single-Network Gift Cards
Certain gift cards are not limited to purchases with specific merchants but work with merchants that accept a particular payment processing network. You can purchase Visa, Mastercard, or American Express gift cards that may be used anywhere these payment processing networks are accepted.
There is a fee charged when purchasing these cards, unlike most single, multi-store, or category gift cards that normally do not charge an additional fee.
Bottom Line: There are several different types of gift cards, including those that only work at a single merchant, those that work at several stores, and gift cards that can be used at any store that uses the same processing network as the gift card. Single-network gift cards such as Visa, Mastercard, and American Express gift cards charge a fee at the point of sale. Regardless of the type of gift card you purchase, prior to making the purchase, be sure to know exactly how and where the gift card can be used.
Purchasing Gift Cards With Credit Cards — Proceed With Caution
Chances are you won’t have a problem purchasing gift cards with a credit card, but there can be hiccups, especially if you purchase gift cards in volume. You may not earn the level of rewards you expected, gift cards could be excluded as an eligible purchase by the card issuer, or in volume, there may be more of a chance for problems to surface with activation and/or using the gift card.
We’ll get into the details of the potential downsides of purchasing gift cards with a credit card later on in our article. However, because there are far more positives than negatives to the practice, we’ll focus on the positive aspects for now.
Here are some of the best credit cards you can use to purchase gift cards and earn maximum rewards.
Best Credit Cards for Purchasing Gift Cards at Grocery Stores
Grocery stores commonly sell a large variety of gift cards. It’s also easy to add a gift card at checkout time when you do your weekly grocery shopping.
Here’s a sampling of the types of gift cards you might find at your local grocery store.
- Gift cards for that particular grocery store (Safeway, Giant, Meijer, etc.)
- Other grocery stores such as Whole Foods
- Entertainment and streaming gift cards (Netflix, Google Play, etc.)
- Travel and transportation (Uber, Hotels.com, Delta Air Lines, gas stations, etc.)
- Food delivery service gift cards such as DoorDash
- Home improvement store gift cards
- Department store gift cards
- Visa, Mastercard, and American Express gift cards
- Restaurant gift cards
- Multi-store gift cards such as Happy Cards, Everywhere cards, etc.
- And many more
It’s worthy to note that most credit card issuers do not categorize warehouse-type stores, such as Target or Walmart, as grocery stores.
Here are some of the best cards for supermarket purchases, including gift cards:
With elevated rewards of 4x Membership Rewards points for up to $25,000 in U.S. supermarket purchases each year, the Amex Gold card is a perfect card to purchase an occasional gift card.
We like that, although the card earns well with a capped 3% cash-back on U.S. supermarket purchases, you won’t have to pay an annual fee. Plus, you might use the card for a major purchase, or purchases, as the introductory 0% APR will save you interest charges while you repay the purchase back over time. As with all intro 0% APR offers, regular APR, as indicated in the table above, applies after the introductory period.
Hot Tip: If your insurance company takes credit or debit cards, you may be able to purchase Visa or Mastercard gift cards at the supermarket, earn elevated rewards, then pay your insurance bill (which may normally result in just 1x earnings) with your gift cards.
With a nice welcome bonus, 6% cash-back at U.S. supermarkets (up to $6,000 in purchases each year; 1x thereafter), and an annual fee that is waived the first year, the Amex Blue Cash Preferred card has some compelling reasons to try the card out to see if its a fit.
To learn more about the best credit cards to use at the supermarket, we’ve put together a list of our favorites.
Best Credit Cards for Purchasing Gift Cards at Office Supply Stores
As a business owner, you’ll have plenty of reasons to purchase gift cards at office supply stores. Office renovations, promotional incentives for employees, and paying for business dining/travel/entertainment could be likely examples.
Here are a couple of business credit cards that can be used for earning maximum rewards at office supply stores.
The Ink Business Cash card is likely the best card for office supply store purchases as it earns 5% cash-back (in the form of Ultimate Rewards points) on up to $25,000 in purchases each account anniversary year.
Ultimate Rewards points earned on the card can be transferred to Chase premium cards such as the Chase Sapphire Preferred® Card, or the Chase Sapphire Reserve® for up to 50% more value when redeemed for travel via the Chase travel portal. Points, once transferred, can then be transferred to hotel and airline partners for even greater potential value.
Huntington Voice Business Credit Card℠
With 4% cash-back earnings on 1 from a list of 10 bonus categories each quarter, including office supply stores, the Huntington Voice Business card is a good choice for earning on your business purchases, all without an annual fee.
Because you can earn 4% on up to $7,000 in purchases each quarter, you could earn up to $1,120 each year. Other bonus categories include grocery stores, gas stations, travel/entertainment, restaurants, electronic stores, utilities, warehouse/discount stores, department stores, home improvement, and auto parts stores.
Bottom Line: With the wide variety of expenses business owners have, there should be no problem maximizing spending limits for bonus categories that include office supply stores.
Best Credit Cards for Purchasing Gift Cards at Gas Stations
Gas stations often run promotions on gift cards, including their own brand, single-store gift cards, or Visa/Mastercard gift cards. Picking up a gift card when filling up your tank is an easy way to multiply your rewards. Note that not all gas stations will accept credit cards as payment for a gift card.
Here are a few cards that reward your gas station purchases well:
The Hilton Surpass card earns big at U.S. gas stations with 6x Hilton Honors points per dollar spent. Additionally, you’ll earn the same 6x earnings at U.S. grocery stores and at U.S. restaurants.
The card also offers a free weekend hotel night after spending $15,000 on the card in a calendar year and cardholders enjoy 10 worldwide Priority Pass airport lounge passes each year.
|Credit Card||Benefits & Info|
|Citi Premier® Card|
(at our partner's secure site)
- Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening.
- Earn 3 Points per $1 spent at Restaurants, Supermarkets, Gas Stations, Air Travel and Hotels.
- Earn 1 Point per $1 spent on all other purchases.
- Annual Hotel Savings Benefit
- 60,000 Points are redeemable for $600 in gift cards when redeemed at thankyou.com
- No expiration and no limit to the amount of points you can earn with this card
- No Foreign Transaction Fees on purchases
- Good to Excellent Credit Recommended (670-850)
- Annual Fee: $95
Earning 3x ThankYou Points on gas purchases, air travel/hotels, and at supermarkets and restaurants makes the Citi Premier card a good choice for everyday purchases.
With no annual fee and 4% cash-back at gas stations, the Costco Anywhere Visa card is the perfect card for Costco members to make gas station purchases. You’ll also earn 2% on other Costco purchases, including in-store gift cards.
In addition to earning well at U.S. supermarkets, the Amex Blue Cash Preferred card earns 3% cash-back at U.S. gas stations.
Bottom Line: Gas stations can sell all sorts of gift cards, not just gas gift cards. It’s also common to find in-store promotions that offer greater earnings or discounted/free gas.
Best Credit Cards for Purchasing Gift Cards From Rotating Bonus Category Merchants
Bonus-earning merchants that change on a quarterly basis can present unique rewards earning opportunities. Here are just 2 of the best cards that offer quarterly bonus earnings in specific categories.
|Credit Card||Benefits & Info|
|Chase Freedom Flex℠|
(at Chase's secure site)
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
- 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more
- 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1% cash back on all other purchases.
- No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
- 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.99% – 23.74%.
- Keep tabs on your credit health – Chase Credit Journey helps you monitor your credit with free access to your latest score, real-time alerts, and more.
- Good to Excellent Credit Recommendation (670-850)
- Annual Fee: $0
You can’t beat 5% cash-back on up to $1,500 in purchases each quarter when spending at quarterly bonus-earning merchants. Here are some examples of merchants that may sell gift cards:
- Department stores
- Home improvement stores
- Gas stations
- Office supply stores
- Warehouse clubs and superstores
U.S. Bank Cash+™ Visa Signature® Card
The no-annual-fee U.S. Bank Cash+ Signature card also earns 5% cash-back on 2 quarterly bonus categories (up to $2,000 per quarter) and 2% on 1 category.
Bottom Line: Merchants and service providers offered as quarterly bonus categories may sell gift cards that could help you maximize earnings each quarter.
Additional Sources for Discounts and Bonus Earnings on Gift Cards
Be on the lookout for opportunities to earn additional rewards when purchasing gift cards with your credit card. Here are some examples of places to look:
It always pays to scroll through your Amex offers for deals on gift cards. An example of a recent offer was a $15 statement credit for a purchase of $100 or more in Happy Gift cards. Since Happy Gift cards charge no additional fees, you could make $15 on the deal.
An additional offer of a $50 statement credit for a $200 Marriott purchase triggered when purchasing a Marriott gift card at a local Marriott-branded property.
Your experience may vary, but it’s definitely worth checking out your Amex Offers for potential deals on gift cards.
Not as lucrative as Amex Offers, but Chase often features statement credits for popular merchants such as Lowe’s, Big Lots, gas stations, and other retailers that sell gift cards. Log in to your Chase card account to find these offers and add them to your card account, including debit cards.
Grocery Store, Gas Station, and Retailer Promotions
One of the best ways to snag a deal on gift cards is to take advantage of promotions offered by merchants near you.
For example, a local gas station could offer $1 off on Visa gift cards and a check of the weekly grocery store ad may see a promo that gives $5 in grocery credits for each $50 worth of gift cards purchased. In addition, it’s not uncommon to see an office supply store discounting card activation fees or a nearby retailer offering an additional $25 added to every $100 worth of gift cards purchased (especially around the holidays).
Who knows what types of offers you’ll find when checking out local promotions!
Bottom Line: There may be promotions readily available that can be utilized to maximize your return when purchasing gift cards. Review your credit/debit card offers, scan the local merchant weekly ad circulars, and check in-store postings for opportunities to earn more when purchasing gift cards with your credit card.
Downsides of Purchasing Gift Cards with Credit Cards
While the upside of purchasing gift cards with your credit card can be beneficial, there are some downsides to watch out for.
Not all gift cards come with activation fees, but if you purchase single network cards such as Visa, Mastercard, and American Express, expect to pay fees as much as $6.95 per card. In order to to make economic sense, the rewards you receive should offset any fees charged.
Single/multi-store and single-category gift cards do not normally charge an additional activation fee.
Credit Card Terms and Conditions
Your credit card’s terms and conditions may exclude earning rewards on gift cards. For example, American Express terms and conditions state that: “Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of traveler’s checks, purchases or reloading of prepaid cards, purchases of gift cards, person-to-person payments, or purchases of other cash equivalents.”
Other credit card issuers may have similar terms/conditions.
These statements do not mean, however, that you will not earn rewards on your gift card purchase. In fact, it is common to earn rewards on gift card purchases. You should just be aware that the card issuer could choose to enforce this policy at any time.
Additionally, be aware that card issuers may frown on you buying gift cards while trying to qualify for a card’s welcome bonus, resulting in you not qualifying for the bonus.
You May Not Earn Rewards
If you’re purchasing a gift card to earn rewards, it’s always good to do a test purchase to be sure you’ll earn the proper level of rewards. For example, if a card’s terms and conditions exclude gift cards, you could include a small gift card purchase with your weekly grocery purchase to determine if you would actually earn full rewards.
In some cases, you will not. Do not purchase large amounts of gift cards without testing first.
Additionally, be aware that some online e-gift cards may be sold by third parties and not the bonus-category earning merchant you had hoped for. An example might be hotel or airline-branded gift cards that may be sold by Points.com.
Lost, Stolen, or Failed To Activate
Regardless of how you pay for a gift card, if it is lost, stolen, or the card was not activated at the point of sale, without the proper documentation, it can be difficult to replace.
Although rare, and mostly with prepaid cards such as Visa, Mastercards, or American Express (rather than single- or multi-store cards) you may experience that the balance has been withdrawn from the gift card as a result of hacking.
Another situation can occur when the card was not properly activated at the point of purchase but your credit card was charged. The gift card would then reflect a zero balance.
While all of these situations are possible to resolve with proper documentation, it can be a hassle.
Finally, it’s a good idea to register the gift card online, using the information that comes with the card, in case the card is lost or stolen.
A good rule to follow, regardless of the type of purchase you make with your credit card, is to pay off the credit card balance in full each statement period. Failure to do so negates any rewards you might have earned on the purchase and contributes to adding up debt (and interest charges) on the card.
Bottom Line: Always do the math to make sure any rewards you receive offset any potential card activation fees. Do a test purchase to ensure you’ll receive the correct level of rewards, and know what to do if there is a problem with any of the gift cards you purchase. Also, be sure to keep all receipts until the full value of the gift card has been used.
Best Cards for Purchasing Gift Cards — Summary
We’ve covered a lot of information, so let’s bring it all together with a breakdown of which card works best where. Here are the cards we’ve mentioned today and where you might find the best rewards when purchasing gift cards:
|Card||Best Merchant/Service for Gift Card Purchase|
|Amex Gold card|
Amex Blue Cash Everyday card
Hilton Surpass card
Citi Premier card
|U.S. supermarkets, U.S. gas stations, restaurants|
|Amex Blue Cash Preferred card||U.S. supermarkets, U.S. gas stations|
|Ink Business Cash card||Office supply stores|
|Huntington Voice Business card||Office supply stores, gas stations, home improvement, electronics stores, restaurants|
|Costco Anywhere card||Gas stations, restaurants, Costco|
|U.S. Bank Cash+ Signature card||Various quarterly bonus-category merchants|
Purchasing gift cards with a credit card can be an easy way to earn a lot of rewards. And, while purchasing an occasional gift card should be perfectly fine, purchasing a large volume could raise red flags with the card issuer.
While this is not an exhaustive list of every credit card you could use to purchase gift cards, the list is designed as a snapshot of possibilities to consider for maximizing the bonus categories on your existing cards and for learning about new cards that might fit your spending profile.
You’ll want to check out your local merchants for those that sell gift cards and that also allow you to purchase with a credit card.
Adding gift cards to the mix of spending on your credit card could turn out to be very rewarding.
The information regarding the Huntington Voice Business Credit Card℠, Hilton Honors American Express Surpass® Card, and U.S. Bank Cash+™ Visa Signature® Card was independently collected by Upgraded Points and not provided nor reviewed by the issuer.
For rates and fees of the American Express® Gold Card, click here.
For rates and fees of the Blue Cash Everyday® Card from American Express, click here.
For rates and fees of the Blue Cash Preferred® Card from American Express, click here.