Yes, you can use a credit card to buy gift cards, but the rewards and fees depend on where you buy them and which card you use
Most credit cards let you purchase gift cards at retail stores, online retailers, and directly from brand websites. The transaction posts as a regular purchase, so you earn whatever rewards your card offers — cash back, points, or miles. However, some cards exclude gift card purchases from bonus categories, and a few issuers have started flagging gift card buys as cash-like transactions that carry different terms.
The real question is whether buying a gift card with a credit card makes financial sense for you. If your card earns 2% cash back on all purchases, buying a $100 gift card costs you nothing extra and nets you $2 in rewards. If your card earns 5% back only in specific categories that don't include gift cards, you might be better off using a different card or paying another way.
Key Takeaways
- Credit cards treat gift card purchases as regular transactions, so you earn the standard rewards rate unless the card's terms specifically exclude them.
- Some cards offer bonus categories (5% back at grocery stores, for example) that may or may not include gift cards sold at those stores — check your card's terms to know which rewards apply.
- A small number of issuers classify gift card purchases as cash-like transactions, which means no rewards and possibly a cash advance fee; this is rare but worth confirming with your issuer before buying.
- Buying a gift card with a credit card does not reset the recipient's ability to use rewards on that card — the gift card itself is a separate payment method with its own terms.
Where you can buy gift cards with a credit card
You can purchase gift cards almost anywhere you can use a credit card: grocery stores, drugstores, big-box retailers, gas stations, and online marketplaces. Target, Walmart, Best Buy, Amazon, and most major chains accept credit cards for gift card purchases at checkout or online. Brand-specific gift cards — from restaurants, hotels, or clothing retailers — can usually be bought directly from the brand's website with a credit card.
The location matters because some cards offer bonus rewards in specific categories. If your card earns 5% cash back at grocery stores, a gift card bought at a grocery store checkout may earn that 5% rate. If the same card earns 1% everywhere else, a gift card bought at a gas station or online would earn only 1%. The card's terms determine whether the bonus applies to gift cards or only to the store's other merchandise.
How rewards work when you buy a gift card
When you use a credit card to buy a gift card, the purchase counts toward your rewards in the same way a regular purchase does — unless your card's terms say otherwise. A card that earns 2% cash back on all purchases will earn 2% on a $100 gift card. A card that earns 3% at restaurants will earn 3% on a restaurant gift card bought online or in a store.
The rewards are yours immediately, even though the gift card recipient hasn't spent the money yet. If you buy a $100 gift card and earn 2% cash back, you get $2 in rewards. The recipient then uses the gift card as a separate payment method, and any rewards they earn (if they have their own credit card) are separate from yours.
Some cards exclude gift cards from bonus categories. For example, a card might offer 5% back at grocery stores but specify in its terms that the 5% applies only to groceries, gas, and pharmacy purchases — not to gift cards sold at those stores. Read your card's rewards terms or contact the issuer before buying if you're counting on a bonus rate.
Cards that may not reward gift card purchases
Most major issuers (Chase, American Express, Capital One, Discover, Bank of America) treat gift card purchases as regular transactions and award rewards accordingly. However, a small number of cards have terms that exclude gift cards or classify them as cash-like transactions.
Some business credit cards and premium travel cards have language stating that gift card purchases do not earn bonus rewards in their top categories. A few cards issued by smaller banks or credit unions may classify gift cards as cash advances, which means no rewards and possibly a fee. This is uncommon, but it's worth checking your card's terms or calling the issuer's customer service line before you buy.
If your card's terms are unclear, the safest approach is to ask the issuer directly: "Do gift card purchases earn rewards on this card, and at what rate?" The answer takes one phone call and removes any doubt.
Gift card purchases and credit limits
Buying a gift card counts against your available credit just like any other purchase. If you have a $5,000 credit limit and a $2,000 balance, you can charge a $3,000 gift card, which would bring your balance to $5,000 and leave you with no available credit. This affects your credit utilization ratio — the percentage of your credit limit you're using — which influences your credit score.
High utilization (using more than 30% of your limit) can temporarily lower your score, even if you pay the bill in full and on time. If you're planning to buy a large gift card, consider paying down your balance first or using a card with a higher limit to keep your utilization lower.
When buying a gift card with a credit card makes sense
Buying a gift card with a credit card is worthwhile when your card earns rewards on the purchase and you plan to pay the bill in full. A 2% cash back card turns a $100 gift card into a $98 net cost to you. A card that earns 5% in a bonus category makes the math even better.
It also makes sense if you want to build a purchase history for a new card or if you're working toward a sign-up bonus that requires a minimum spend. A $500 gift card purchase counts toward that minimum just like any other purchase.
It does not make sense if your card charges an annual fee and you're only earning a small amount of rewards, or if the card doesn't reward gift card purchases at all. A $95 annual fee card earning 1% cash back on a $100 gift card nets you $1 in rewards — a bad trade.
Gift cards and fraud protection
When you buy a gift card with a credit card, the credit card's fraud protections cover the transaction itself, not the gift card balance. If someone fraudulently charges a $100 gift card to your account, you can dispute the charge with your card issuer and typically get the $100 back.
However, if you buy the gift card legitimately and then lose it or someone steals it, your credit card issuer is not responsible for the gift card's remaining balance. The gift card issuer (Target, Amazon, etc.) may have their own process for replacing a lost or stolen card, but that's separate from your credit card dispute process. Keep gift card receipts and treat them like cash once you have them.
Frequently Asked Questions
Do gift card purchases count toward my credit card sign-up bonus minimum spend?
Yes, gift card purchases count as regular transactions and apply toward your minimum spend requirement. A $500 gift card purchase counts the same way a $500 merchandise purchase does. However, check your card's terms to confirm that gift cards aren't excluded from the bonus — this is rare but worth verifying.
Will buying a gift card hurt my credit score?
It can temporarily affect your score if it raises your credit utilization ratio above 30%. The impact is usually small and goes away once you pay the balance down. If you're about to apply for a loan or mortgage, consider paying down your balance before buying a large gift card.
Can I use a gift card to pay off my credit card balance?
No. A gift card is a prepaid card for a specific retailer or brand, not a payment method that works with your credit card issuer. You cannot use a Target gift card to pay your Chase credit card bill, for example. You would need to use the gift card to buy something at Target, then use a different payment method to pay your credit card.
What if the gift card issuer goes out of business?
Your credit card issuer is not responsible for the gift card issuer's financial problems. If a restaurant closes and its gift cards become worthless, you cannot dispute the charge with your credit card company. Your only recourse is to contact the gift card issuer or their parent company. This is why buying gift cards from large, established retailers is safer than buying from small or struggling businesses.
Do I earn rewards twice if I buy a gift card and then use it?
No. You earn rewards once when you buy the gift card with your credit card. When the recipient uses the gift card to make a purchase, they are using a prepaid balance, not a credit card, so no additional rewards are earned. The only way to earn rewards twice is if the recipient uses their own credit card to buy something and then uses the gift card as a separate payment method for a different purchase.