Yes, you can buy gift cards with a credit card at most retailers
You can use a credit card to buy gift cards at nearly every major retailer — grocery stores, department stores, gas stations, restaurants, and online marketplaces all accept credit cards for gift card purchases. The transaction processes the same way as any other purchase: the card is charged immediately, and you receive the gift card code or physical card right away.
The catch is that some credit card issuers and individual retailers place restrictions on gift card purchases, and those restrictions affect your rewards and your account standing. Understanding which restrictions apply to your card and the retailer you're buying from matters before you check out.
Key Takeaways
- Most credit cards allow gift card purchases, but some issuers classify them as cash advances or exclude them from rewards categories.
- Cash advance fees and interest rates apply immediately if your card treats gift cards as cash advances, making the purchase expensive.
- Rewards points or cash back may not post for gift card purchases even when the card normally earns them for that retailer category.
- Buying gift cards to other retailers (not the card issuer's own brand) typically has no restrictions, while buying gift cards issued by your bank may be blocked.
- Checking your card's terms or calling the issuer before purchase prevents surprises at checkout or on your statement.
When your credit card treats gift cards as cash advances
Some credit card issuers classify gift card purchases as cash advances rather than regular purchases. A cash advance means the issuer charges you a fee — typically 3% to 5% of the purchase amount — and starts charging interest immediately at a higher rate than your regular purchase APR. There is no grace period for cash advances the way there is for regular purchases.
This classification is most common with cards issued by banks and credit unions, particularly when you buy a gift card issued by that same bank or a competing financial institution. For example, buying an American Express gift card with a Bank of America credit card might trigger a cash advance fee, but buying a Target gift card with the same card usually will not.
You can find out whether your card treats gift cards as cash advances by reading your card's terms document (called the Schumer Box, available on the issuer's website) or by calling the card's customer service number before you buy. Ask specifically: "Are gift card purchases classified as cash advances on this card?" A direct answer takes 30 seconds and saves you money.
Gift card purchases and rewards points or cash back
Even when your card does not charge a cash advance fee, the purchase may not earn rewards. Many issuers exclude gift card purchases from bonus categories or from earning any rewards at all, even if the card normally earns points for that retailer or category.
For example, a card that earns 5% cash back on grocery store purchases might earn 0% on a gift card bought at that same grocery store. The issuer's reasoning is that gift cards are a form of payment instrument rather than a final purchase, so they fall outside the rewards structure. This exclusion is not always disclosed clearly in marketing materials, which is why checking your terms or calling ahead matters.
Some issuers do allow rewards on gift card purchases. If earning rewards on gift cards is important to your strategy, ask the issuer directly: "Do gift card purchases earn rewards on this card?" and ask them to cite the specific terms that confirm it.
Buying gift cards for your own bank or card issuer
Many issuers block you from buying gift cards issued by the same bank or financial institution. This restriction prevents you from using a credit card to load value onto a prepaid card or gift card that the issuer controls, which they view as a form of balance transfer or account manipulation.
For example, you may not be able to buy a Visa gift card with a Visa credit card issued by the same bank, or buy a bank's own branded gift card with a credit card from that bank. However, you can typically buy a gift card from a third-party retailer (Target, Amazon, Starbucks) with any credit card, because the retailer is separate from the card issuer.
If you encounter a block at checkout, the system will decline the transaction. You can then use a different payment method or a credit card from a different issuer.
How to avoid fees and surprises when buying gift cards
Before you buy a gift card with a credit card, take these steps: First, check whether the card treats the purchase as a cash advance by reading the terms or calling customer service. Second, confirm whether the purchase will earn rewards if that matters to you. Third, if you are buying a gift card issued by a bank or financial institution, use a credit card from a different issuer to avoid a block.
If you are buying a large gift card (over $500), calling ahead is worth the time. A customer service representative can confirm all three points and sometimes can note your account so the purchase does not trigger a fraud alert at checkout.
For online purchases, check the retailer's payment page before entering your card details. Some retailers display a note if gift card purchases have restrictions or will not earn rewards. If you do not see a note, that does not mean there are no restrictions — it means the retailer is not disclosing them, so the issuer's terms control.
Gift cards and your credit utilization ratio
A gift card purchase counts toward your credit utilization ratio the same way any other purchase does. If you buy a $500 gift card on a card with a $2,000 limit, your utilization jumps to 25% (assuming no other balance). High utilization can temporarily lower your credit score, even if you pay the balance in full at the end of the month.
If you are planning to apply for a loan or another credit card soon, buying a large gift card right before the application can hurt your score. Paying down the gift card balance before the application date helps, but the utilization ratio is calculated on your statement balance (the amount owed on your billing date), not your current balance. So paying it down after the statement closes but before the application is what matters.
Alternatives if your card blocks or charges fees for gift cards
If your primary credit card charges a cash advance fee or blocks gift card purchases, you have options. Use a different credit card that does not have these restrictions. Many cards issued by retailers (Target, Amazon, Costco) have no restrictions on gift card purchases and may even earn bonus rewards when you buy gift cards at that retailer.
You can also buy gift cards with a debit card, which avoids credit card restrictions entirely. Debit cards do not charge cash advance fees and do not affect your credit utilization. The trade-off is that you lose any rewards you would have earned with a credit card, and debit cards offer less fraud protection than credit cards.
Another option is to buy gift cards from a third-party reseller or marketplace, though this carries risk. Resellers sometimes sell discounted gift cards, but they also sometimes sell stolen or fraudulent cards. Buying directly from the retailer or issuer is safer.
Frequently Asked Questions
Will buying a gift card hurt my credit score?
A gift card purchase itself does not hurt your score, but it increases your credit utilization ratio, which can lower your score temporarily. The impact is largest if you have a small credit limit or already carry a balance. Once you pay off the gift card, the utilization drops and your score recovers.
Can I buy a gift card with a credit card and then return it for cash?
Most retailers do not allow returns of gift cards for cash refunds. Some retailers will exchange an unused gift card for a different denomination or product, but this varies by store policy. Attempting to use a gift card purchase as a workaround to get cash from a credit card is not a reliable strategy.
What happens if I buy a gift card and the retailer goes out of business?
If the retailer closes, the gift card typically becomes worthless unless the retailer's assets are sold to another company that honors the cards. Credit card issuers do not reimburse you for gift card purchases the way they might for other disputed charges. This is a risk of gift cards, not a credit card issue.
Do I have to report gift card purchases to the IRS?
Personal gift card purchases are not reported to the IRS. If you are buying gift cards as a business expense or for resale, tax rules may apply depending on your situation. Consult a tax professional if you are unsure whether your purchase has tax implications.
Can I use a credit card to buy a gift card and then use that gift card to pay off the credit card?
No. Gift cards cannot be used to make credit card payments. The gift card is a separate payment instrument tied to a specific retailer or issuer, and credit card companies do not accept them as payment. This would also be considered a form of balance transfer or cash advance, which most issuers block.