Yes, you can purchase gift cards with a credit card in-store and online.
Buying a gift card with a credit card is considered a "cash equivalent" transaction by most issuers. That means you would probably be better off buying the gift card with a debit card or cash.
Since the classification of gift card purchases varies between issuers, check how the transaction would be classified before buying — especially if you plan on spending a lot of money.
Coming up next
Key takeaways
- Most credit card issuers classify buying gift cards as "cash equivalent" transactions, meaning they're treated similarly to cash advances.
- You won't earn points or cashback, interest begins to accrue immediately, may attract a one-off cash advance fee, and are ineligible for introductory rates.
Why buying a gift card with a credit card probably isn't worth it
Gift card purchases are typically considered equivalent to cash by most credit card issuers.
If your issuer classifies gift card purchases as a cash advance and you want to earn points, here's why that means you should probably reconsider your next steps.
- You won't earn points. There are no credit cards that earn points on cash advances.
- You won’t get cashback. If you buy using a cashback credit card, you will not earn cashback on the transaction if classified as a cash advance.
- You'll be charged a one-off cash advance fee. This fee is generally either a percentage of the amount spent (2-3%) or a fixed amount ($2-$3), whichever is greater.
- Interest accrues immediately. Your credit card's interest-free days do not apply to cash advances. Even if you have no balance or are up to date with payments, you’ll be charged interest at the cash advance rate from the transaction date.
- Introductory rates won’t apply. If the transaction is classified as a cash advance, introductory offers for interest-free purchases do not apply.
Should you buy a gift card with a credit card?
Whether or not it makes sense to buy a gift card with a credit card depends on why you want to buy the gift card.
It is unlikely to back out if you want to manufacture points, i.e. buy a gift card with your credit card, earn points (with Qantas, Velocity, or another program), and then sell the gift card.
If you want to give a gift card to someone and don't care about earning points, you could buy it with your credit card, although it would be cheaper to buy it with cash or a debit card.
Example
Imagine you decide to buy a $100 gift card using your credit card, hoping to earn points or cashback. However, since your credit card issuer classifies this as a cash equivalent transaction:
- You won't earn any rewards points or cashback on the $100 spent.
- You might be charged a cash advance fee, typically around 3% of the transaction, costing you an extra $3.
- Instead of benefiting from any interest-free days you might have, interest starts accruing immediately on the $100 at the cash advance rate, which is typically higher than the purchase rate.
- If you were relying on an introductory interest-free offer, this transaction wouldn't be covered.
In the end, your $100 gift card could end up costing you more than its face value, making it more economical to have purchased it with cash or a debit card.
FAQs
Can you earn points when buying gift cards with a credit card?
No. You cannot earn points when buying gift cards with a credit card because the transaction will be classed as a cash equivalent.
Can you earn cashback when buying gift cards with a credit card?
No. You cannot earn cashback when buying gift cards with a credit card because the transaction will be classed as a cash equivalent.
