Yes, you can use a credit card to buy gift cards, but it often costs you money
Most retailers let you pay for gift cards with a credit card at the register or online. Visa, Mastercard, and American Express all work at major stores. The transaction posts to your credit card statement like any other purchase.
The catch is that you are borrowing money at your card's interest rate to buy something that will be spent later. If you carry a balance, you pay interest on the gift card amount until you pay off the card. You also lose any rewards or cash back your card normally earns, because most issuers exclude gift card purchases from bonus categories.
The only time this makes financial sense is if you have a zero-percent promotional period on your card and you plan to pay off the balance before the rate jumps back up.
Key Takeaways
- Credit card companies typically do not count gift card purchases toward bonus rewards or cash back categories, even if your card normally earns them on retail purchases.
- If you carry a balance on your credit card, you will pay interest on the gift card amount until the balance is paid in full.
- Some credit cards exclude gift cards from purchase protection and extended warranty benefits, so check your card's terms before buying.
- Using a debit card, cash, or your checking account directly avoids interest charges and keeps the purchase separate from your credit line.
How gift card purchases affect your credit card rewards
Most credit card issuers treat gift card purchases as a regular retail transaction, which means they fall outside bonus categories. If your card earns 3% cash back on groceries but you buy a grocery store gift card, you earn 1% (or whatever the base rate is) instead of 3%.
Some cards exclude gift cards entirely from any rewards earning. Check your card's terms or call the issuer before you buy to confirm what rate you will earn. The difference adds up quickly if you are buying a large gift card.
A few premium cards do earn full rewards on gift card purchases, but these are rare and usually require an annual fee. For most people, paying with cash or a debit card avoids this penalty altogether.
Interest charges if you carry a balance
When you buy a gift card with a credit card and do not pay off the full balance that month, the gift card amount accrues interest at your card's standard rate. This happens even if the gift card itself will not be used for weeks or months.
The interest clock starts when ready. If your card charges 18% APR and you buy a $100 gift card, you will owe roughly $1.50 in interest after one month if you do not pay the balance. Over a year, that becomes $18 in interest on a $100 purchase — a 18% tax on a gift you have not even given yet.
If you do not have the cash to pay off the card when ready, use a debit card or cash instead. The gift card still gets purchased, but you avoid the interest charge.
Purchase protection and extended warranties on gift cards
Many credit cards offer purchase protection (coverage if an item is damaged or lost) and extended warranties on items you buy. Gift cards are often excluded from these protections.
This matters if you are buying a high-value gift card and mailing it, or if you are worried about fraud. Check your card's benefits guide or call the issuer to ask whether gift cards are covered. If they are not, a debit card or cash removes the risk of losing money to a lost or stolen card.
When using a credit card for gift cards makes sense
The main scenario where this works in your favor is a zero-percent promotional period. If your card offers 0% APR for 12 months on new purchases, you can buy a gift card, let it sit, and pay off the balance before the promotional rate ends. You avoid interest entirely.
This only works if you are disciplined about paying off the balance before the promotional period expires. If you forget or cannot pay it off, the interest rate jumps to the standard rate and you owe back interest on the full amount.
Another scenario is if you are buying a gift card for yourself and you know you will spend it within a month. You can earn the base rewards rate (even if it is lower than your bonus category) and pay off the card before interest kicks in.
Better alternatives to using a credit card
If you want to buy a gift card without the interest or rewards penalty, use a debit card or cash. Both let you make the purchase without borrowing money or triggering interest charges.
Some retailers offer gift card discounts through third-party resellers like Raise or CardCash. You buy the card at a discount (usually 5% to 15% off) and pay with a debit card or cash. This saves you money upfront instead of costing you interest later.
If you want to earn rewards on a gift card purchase, ask the retailer whether they offer a rewards program of their own. Many stores let you link a loyalty account to your purchase and earn points or cash back directly, without needing a credit card.
What happens if a gift card is lost or stolen
If you buy a gift card with a credit card and it gets lost or stolen before you give it away, you have two problems: the credit card charge still posts, and the gift card balance may be gone.
Most retailers will not replace a lost or stolen gift card unless you have the original receipt and the card number. Even then, replacement is not may provide. If your credit card offers purchase protection, check whether gift cards are covered — many are not.
This is another reason to use cash or a debit card instead. If a cash gift card is lost, you lose the money, but you do not also have a credit card charge sitting on your statement.
Frequently Asked Questions
Do credit card companies count gift card purchases toward sign-up bonuses?
No. Gift card purchases almost never count toward sign-up bonus spending requirements. If you are trying to meet a bonus threshold, buy other items instead. Check your card's terms to confirm, as policies vary by issuer.
Can I use a credit card to buy a gift card for another credit card?
No. You cannot use a credit card to buy a gift card for another credit card. Retailers and card issuers block this to prevent cash advances and fraud. You can only buy retail gift cards (for stores, restaurants, or services) with a credit card.
Will buying a gift card hurt my credit score?
Buying a gift card itself does not hurt your score. However, if the purchase pushes your credit card balance higher and increases your credit utilization ratio, your score may drop slightly. Paying off the balance quickly will reverse this effect.
What if the gift card expires before it is used?
If a gift card expires unused, you have lost the money and still owe the credit card charge. This is another reason to avoid buying gift cards on credit. Use cash or a debit card so the loss is limited to the gift card itself, not also a credit card balance.
Can I return a gift card I bought with a credit card?
Most retailers do not accept returns on gift cards once they are purchased. Check the store's policy before buying. If you do return it, the refund goes back to your credit card as a credit, which reduces your balance but does not give you cash back.