Yes, you can use a credit card to buy gift cards, but the rewards and fees depend on which card you use and where you buy
Most credit cards let you purchase gift cards at retailers, online, or through the card issuer itself. The transaction posts as a regular purchase, so you earn whatever rewards rate your card offers for that merchant category. A 2% cash back card earns 2% on a gift card bought at Target. A card with 5% back on groceries earns 5% if you buy a Visa gift card at your grocery store.
The catch is that gift cards themselves often carry fees — typically $2.95 to $6.95 per card — and those fees don't earn rewards. You're paying the fee with after-reward dollars. Some retailers waive fees for in-store purchases or during promotional periods, so the math changes depending on where and when you buy.
The real limitation isn't whether you can use a credit card. It's whether the purchase counts toward your card's bonus categories, and whether the gift card's fee makes the rewards worthwhile.
Key Takeaways
- Credit cards process gift card purchases as regular transactions, so you earn your card's standard or category rewards rate on the purchase amount.
- Gift card fees ($2.95 to $6.95 per card) are charged separately and do not earn rewards, so factor the fee into whether the rewards justify the purchase.
- Buying gift cards at a merchant that matches your card's bonus category (like a grocery store for a 5% groceries card) maximizes rewards.
- Some retailers waive gift card fees during sales events or for in-store purchases, which improves the value of using a rewards card.
- Buying gift cards to meet a credit card's spending requirement works, but only if the rewards or sign-up bonus outweigh any fees you pay.
How rewards are calculated when you buy a gift card
When you swipe a credit card to buy a gift card, the issuer sees a purchase at that merchant. If you're buying a Starbucks gift card at Target, the transaction codes as a Target purchase. If you're buying it directly from Starbucks, it codes as Starbucks. Your card's rewards rules apply to that merchant code, not to the gift card itself.
A card with 5% cash back on groceries will earn 5% if you buy a gift card at Whole Foods or Kroger, because those merchants code as grocery stores. The same card earns its base rate (often 1%) if you buy the same gift card at a general retailer like Walmart. The gift card's value doesn't matter — only where the purchase happens.
The fee charged by the retailer or card issuer is a separate line item. If a $50 Visa gift card costs $54.95 (a $4.95 fee), you earn rewards on $50, not $54.95. You pay the $4.95 fee out of pocket with no rewards attached.
When gift card fees eat into your rewards
A $4.95 fee on a $50 gift card is a 9.9% cost before you even use the card. If your credit card earns 1% cash back, you're earning $0.50 in rewards while paying $4.95 in fees — a net loss of $4.45. The math only works if your rewards rate is high enough or the fee is waived.
Here's the break-even point: at a 1% rewards rate, you need a fee-free gift card to come out ahead. At 2% rewards, a $4.95 fee on a $50 card still costs you $3.95 after rewards. At 5% rewards, the $4.95 fee costs you $2.45 after rewards. The higher your card's rewards rate for that merchant, the more sense it makes to pay the fee.
Some retailers waive fees if you buy in-store rather than online, or during holiday promotions. Target, Best Buy, and Walmart periodically offer fee-free gift cards. Checking the retailer's website or asking at checkout can save you $3 to $7 per card.
Using gift card purchases to meet spending requirements
Credit card sign-up bonuses often require you to spend a certain amount — say, $3,000 in three months — to earn the bonus. Buying gift cards counts toward that spending requirement because the purchase is real money leaving your account. A $500 gift card purchase counts as $500 of spending, even though you haven't spent the gift card's value yet.
This strategy makes sense only if the sign-up bonus is large enough to cover the gift card fees. If a card offers a $300 bonus for $3,000 spending, and you need to buy $500 in gift cards to reach that threshold, you're paying roughly $25 in fees to earn a $300 bonus. That's a net gain of $275. But if the bonus is only $100, the fees eat most of it.
The risk is that you're buying something you don't need just to hit a spending target. If you wouldn't buy those gift cards otherwise, the bonus isn't worth the cost.
Where to buy gift cards with a credit card for maximum rewards
The best place to buy a gift card depends on your card's rewards structure. If your card earns 5% at grocery stores, buy gift cards at Kroger, Whole Foods, or Safeway. If it earns 5% at gas stations, buy them there. If it earns 2% on all purchases, the merchant doesn't matter — only the fee does.
Some cards offer rotating 5% categories that change each quarter. Check your card's current category before buying. A card might earn 5% at grocery stores one quarter and 5% at gas stations the next. Timing your gift card purchase to a high-rewards quarter saves money.
Warehouse clubs like Costco and Sam's Club often sell gift cards with no fee, and some credit cards earn bonus rewards at these retailers. A card earning 2% at warehouse clubs on a fee-free gift card is a clean transaction with no hidden costs.
Gift cards issued by credit card companies
Visa, Mastercard, and American Express sell their own gift cards, usually through their websites or partner retailers. These cards typically carry a $2.95 to $6.95 fee depending on the amount. You can buy them with any credit card, and you'll earn rewards based on where you purchase them.
Buying a Visa gift card at a grocery store with a 5% groceries card earns 5% on the purchase price. The Visa card itself is a prepaid card, not a credit card, so it doesn't earn rewards when you use it — but the purchase of it does.
These cards are useful if you need a card that works anywhere Visa is accepted, or if you're buying for someone who doesn't have a credit card. The fee is the main drawback, and it's the same whether you buy online or in-store.
Potential issues and limits to watch for
Some credit card issuers have policies against using gift card purchases to meet minimum spending requirements for bonuses. Chase, for example, has stated that certain types of gift card purchases may not count toward bonus spending. Check your card's terms or call the issuer before buying gift cards specifically to hit a spending target.
Retailers sometimes code gift card purchases differently than regular purchases. A gift card bought at a grocery store might code as a "merchandise" purchase rather than a "grocery" purchase, which could disqualify it from your card's bonus category. This is rare, but it happens. If you're relying on bonus rewards, test with a small purchase first or contact the retailer to confirm how it codes.
Buying gift cards in large quantities can trigger fraud alerts on your credit card account. If you're buying $2,000 in gift cards to meet a spending requirement, your card issuer might flag it as unusual activity and temporarily freeze your account. Call your issuer before making large purchases to avoid delays.
Frequently Asked Questions
Do I earn rewards on the gift card fee itself?
No. The fee is charged separately and does not earn rewards. If a $50 gift card costs $54.95, you earn rewards only on the $50 purchase amount. The $4.95 fee is paid with no rewards attached.
Can I use a credit card to buy a gift card for the same credit card?
Yes, you can buy a Visa gift card with your Visa credit card, or an American Express gift card with your American Express card. The purchase earns rewards based on where you buy it, not on the card brand. You'll earn rewards on the transaction, but the gift card itself is a separate prepaid card.
Will buying gift cards hurt my credit score?
No. Gift card purchases are regular transactions that don't affect your credit score. Your credit utilization (how much of your credit limit you're using) may temporarily increase, but it returns to normal once you pay your bill. Paying on time is what matters for your score.
Are there gift cards with no fees?
Yes. Costco and Sam's Club sell many gift cards with no fee. Some retailers waive fees during promotional periods or for in-store purchases. Check the retailer's website or ask at checkout before buying.
Can I use a debit card instead of a credit card to buy gift cards?
Yes, but you won't earn rewards. Debit cards don't have rewards programs the way credit cards do. If your goal is to earn rewards on the purchase, a credit card is the better choice.