When Should I Buy a Gift Card With a Credit Card?

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Million Mile Secrets reader Richard emails with a question:

Quick question.  Please give me a good example when you would buy a Visa gift card with a credit card as opposed to just using the credit card to pay for the item or service?  Thank you.

Buying Gift Cards Credit Cards

Should I Buy Gift Cards or Use my Credit Card?

Buying Gift Cards

There are 2 big reasons why Richard may want to buy Visa, MasterCard or AMEX gift cards at many grocery stores, pharmacies, and gas stations with a credit card.

You can usually put up to $500 on these cards and then use these gift cards like a credit card to buy almost anything else.  There is usually a $4 to $5 fee to buy a gift card.

1.   Complete Minimum Spending for Bonus

Let’s say that you have to spend $3,000 within 3 months to get the 40,000 point (~$420 in travel) on the Barclaycard Arrival Plus™ World Elite MasterCard®.

Just 5 days before the 3 month period to complete the minimum spending ends, Richard realizes that he still has to spend $200 to complete the $3,000 spending requirement.

But Richard doesn’t have $200 in expenses!  Sure, he could buy something that he didn’t really need just to get the sign-up bonus.  But you shouldn’t buy stuff just for the sign-up bonus.

In this case, it makes sense for Richard to buy Visa, MasterCard, or AMEX gift cards with a credit card.  And use these gift cards to pay for future purchases such as groceries, dining, etc.

This way, Richard can complete the minimum spending requirement on his Barclaycard Arrival Plus™ World Elite MasterCard® and get the ~$420 bonus which he can use for any travel expense!

And he has $200 in gift cards which he can use for his regular day-to-day expenses.

2.   Extra Points for Buying Gift Cards

You also get extra bonus points (sometimes called a “category bonus”) when you buy gift cards at grocery stores, drug stores, gas stations & office supply stores with certain credit cards.

In some cases, these extra points are worth the $4 to $5 fee to buy a gift card.

For example, let’s say that you are a business owner and buy gift cards for your employees and customers for the holidays.

You will get 5X Ultimate Rewards points if you buy these gift cards at office supply stores (Office Max/Office Depot, Staples etc.) using your (no longer offered) Ink Bold, Ink Plus or other Chase Ink card.  Ultimate Rewards points can be redeemed for cash, used for travel, and transferred to airline and hotel partners.

Buying Gift Cards Credit Cards

5X Points at Office Supply Stores!

5X Ultimate Rewards points for the same gift cards is MUCH better than 1X point elsewhere!

Similarly, Richard would get 2X Membership Rewards points when he buys gift cards at grocery stores and gas stations with his American Express Premier Rewards Gold card.

Note that the terms and conditions of some credit cards say that you won’t get bonus points for gift card purchases.  But that usually refers to purchases of gift cards directly from a bank or financial institution and not when you buy them at a grocery store etc.

Or Richard could get 2x FlexPoints on his highest category spending in groceries, gas, or travel.  So he can use his US Bank Flex Perks Travel Rewards card and buy gift cards at gas stations and grocery stores.

Buying Gift Cards Credit Cards

Buying Gift Cards At Groceries Stores

Here’s a post on the best grocery store credit cards.

Lose Purchase Protection

Richard should also know that he gets MUCH better purchase protections (ability to return, dispute transactions etc.) when he uses a credit card to buy something (instead of using a gift card).

That’s why it may make sense to sometimes directly use a credit card to buy expensive items such as electronics etc.

Bottom Line

Richard can earn up to 5X more points if he buys Visa Gift cards with certain miles and points credit cards instead of just using his card to pay for an item or service.

However, he may not like the hassle of shuffling around gift cards.  And he may feel that earning extra miles and points is not worth giving up the credit card purchase protections on large purchases.

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35 responses to “When Should I Buy a Gift Card With a Credit Card?

  1. Great info.

    I would also add 3.) To use for debit transactions in which CCs attract a high processing fee. For instance, my condo association fees charge a 3.5% processing fee for credit. I can buy $500 gift cards, assign pins, and pay a lower fee than using a CC.

  2. For me, the bigger question is why anyone would buy a gift card with cash. Maybe I’m missing something, but it just doesn’t make sense to me to pay a fee to convert your cash into a cash equivalent product. Save the expense of the fee and just give your recipient real cash.

  3. For those of us who buy groceries and gas at the Kroger family of grocery stores, PLUS have a Kroger “i-wireless” cell phone, the rewards that can be reaped are considerable. (in my case, up to 27% of purchases)

    Here’s how it works for me, and I wait every quarter for when Kroger puts on the “4x Fuel Points” promo. (Next one begins later this week!)

    Purchase gift cards totaling say, for round #’s sake, $250.00. (no fees — what are you talking about Phil? I pay off my balances each month.)

    I then get back up to $67.50 in direct, tangible benefits. Here’s how:

    First, the $250.00 worth of gift card purchases during the 4X promotions nets me 1,000 Kroger points, worth $1.00 per gallon fuel discount. (on up to a single 35 gallon purchase, thus worth $35.00. If you’re not driving a big tank SUV, there’s several strategies for getting full 35 gallon purchase, either with two cars at the pump, back-to-back, or with extra gas tanks)

    Second, those Kroger 1,000 points also give me 200 minutes added to my Kroger i-wireless cell phone. (which for my econo/smart-phone plan, @ 10 cents/min. is worth $20.00)

    Third, if I purchased the gift card during a quarter when Chase Freedom is giving me 5% discounts on Kroger purchases, that’s another $12.50 cashback on a $250 purchase (even with purchasing the gift cards — though I have heard from others that may be closing) I’ve also used the AMEX blue to get 3% cashback on Kroger in-store purchases – including gift cards.

    Bottom line: for that $250.00 in gift card purchases at Kroger, I reap $67.50 in direct, tangible benefits. I think of it as a 27% discount on the purchases I make then with the gift cards. Even if it’s “only” 22% (or $55) if the Chase discount no longer works on Kroger gift cards, anybody know of another way to get approx. 20+% discounts off purchases at, say, Disney, Lowe’s, Sears? Works for me.

    I’ve done this repeatedly for over 2 years now, sometimes up to 1,000.00 per month — and yes, the fuel points “roll over” to the next month, though that can be tricky. As Daraius likes to quip, “your mileage may vary.” Pay attention to the details.)

  4. I think I know what Richard may be referring to by “fees.” Yes, some of the “gift cards” may charge a fee, on top of the face value of the card. (such as the variable load Amex cards — which aren’t eligible for the 4X fuel point promotion anyway at KR) But in my experience, most gift cards are fee-free. Only hassle for me is not losing them.

    PS: Ironically, I first began to realize the “power” of these KR 4X gift card promotions when doing just as Daraius has long suggested, to use gift card purchases to meet a spending requirement for a new airline credit card….. t’was a pleasant surprise! (I even get the 4X points when buying Kroger i-wireless cash cards…. forgot to figure in that hidden benefit there too)

  5. What type of american express gift card should i purchase? Are they all the same? Can I load it to greendot or bluebird? best place to purchase? lowest fee?

  6. The reason I find myself continuing to purchase gift cards is to get points for paying my Wells Fargo mortgage and car loan. With the car I almost paid cash but found out about bluebird just in time so I took a loan and have been paying it off in big chunks to meet minimum spends very easily. Gift cards and bluebird make min spends super easy even if you don’t have a ton of expenses and it lets you get points for paying all your bills you normally cannot with a CC.

  7. I have been having much luck the past 2-3 months buying VISA gift cards through giftcardmall.com and going through ebates to get there. Ebates gives me $5 back for every card I purchase, so I end up only paying the $2.99 shipping fee. (which is less than buying the cards at CVS and paying $4.95 processing fee) (I’ve also had issues at CVS trying to buy the VISA gift cards with credit cards) I then load those cards to my Bluebird and pay my mortgage and a few other bills each month.

    Will…what kind of gift cards are you buying at Kroger? Restaurant cards? Or VISA gift cards. I bought a VISA gift card at Kroger once and got burned because I was not able to load it to my Bluebird.

  8. Do not bet too much on gift cards.
    You may get too many SARs(You do not want to deal with law enforcement people)

  9. Laura R…Which VISA gift card are you buying from the gift card mall and how are you loading it on to your BB account? I would like to use BB to pay some of my bills that won’t accept CC but I can’t find a way to load gift cards other than VR to the account.

  10. Always charge $500 loadable gift cards to meet minimum spending. Get PIN by telephone or website to convert them into debit cards. Buy money orders at Walmart (or USPS at higher cost) to deposit into bank account. SAME DAY funds recycling to pay off credit cards. Trivial fees compared with big bonus miles or points. Always call up for new cards to get them unblocked for big gift card buys. Credit card computers don’t believe you are buying $hundreds and $thousands of groceries and will block such purchases. Why waste time with Bluebird and Amazon?

  11. Each $500 VISA gift card from giftcardmall.com costs $3.95 fee + $2.00 shipping = $5.95.
    More convenient, when buying groceries, to pay the $5.95 and to have no waiting time to get them in the mail.

  12. Ebates doesn’t give cash back on giftcardmall purchases for Visa gift cards:

    Special Conditions for GiftCardMall.com
    Exclusions: Cash Back is not available on gift cards for Hess Gasoline, Gulf, Safeway, BP, or Best Buy; or on Visa gift card, Visa purchase Fee, Customization Fee, Shipping Cost, or Tax.

  13. People keep telling me that Ebates doesn’t give cash back on Visa gift cards, but I have been getting it! No idea why….but I am. I usually buy 3 per month. And I don’t mind waiting to get them in the mail…I’m not really in that much of a hurry to go to Walmart to load them on the BB. 🙂 I hate going to Walmart.

  14. Are there any gift cards that can be loaded onto BB or is it only VR that work? I have been looking for a simple answer to this for a while now, if anyone can help!

  15. AAA in Nov thru Dec has a deal for AAA members & family, you can get Visa (some locations AMX) gift cards free if you’re an AAA member. (AAA membership (basic) is $66, so this may be a deal for a few of the MMS readers. Here in metro ATL, our local AAA/Travel Agency has Visa GC for no fee thru end of Dec. Transactions for US Bank (our Carlson Biz Card)–are not processed as a cash advance. Flyer Talk posts indicate Chase, BA also process GC purchases w/no Cash Advance.

  16. @Nicole – Visa and Mastercard variable amount gift cards can be loaded onto Bluebird – just make sure they say “Now a DEBIT card” or some such on the packaging. With one card (I believe it’s MC but I haven’t done it in a while) you just call a 1800# to set your PIN, and then use it at the Bluebird kiosk.

    I believe the Visa gift card just uses the last four digits of the card number for the PIN, which is infinitely easier. Do a search here on MMS for Daraius’ posts on Bluebird – he does a great job outlining the process.

  17. Don’t forget to sign up for Plink if you are buying visa gift cards at Staples, I wrote a full article about it.

    • @IPG – That’s another great use of gift cards!

      @ Will – Thanks for sharing your strategy in such detail. I knew about the fuel points, but didn’t know about the i-wireless cell phone!

      @cruiseaddict2 – You can’t load an AMEX gift card to your green dot or bluebird.

  18. @Wes – Looks like the AAA deal is only in certain states. Not in California for example. YMMV.

    @Susan – It depends on the issuer. Vanilla VISA Gift Cards use the last 4 digits for the default PIN. Not true for all VISA cards though. For example US Bank you have to call in. If unsure, call the number on the back of the card. Generally do NOT go to any website they mention.

  19. Guys um fairly new to this strategy of buying gift cards so I have two questions:
    1. Does this hold true (getting points for gift cards purchases) for all credit cards? I have a Citi ThankYou Premier card
    2. Can it be considered cash advance?

    • @Gustavo – It works for most credit cards. You aren’t charged cash advance fees if you buy gift cards in another store (say a grocery store), but you might pay cash advance fees if you buy them online directly from a bank.

  20. To meet min spending, buy $500 loadable VISA gift cards, get a PIN to convert to debit cards, buy money orders at Walmart (MOs in USPS cost more.), deposit MOs into bank account. Same day funds recycling. Always call up new cards to get them unblocked. Their computers don’t believe you are buying $500, $1,000, etc. in groceries.


  22. Lately, I have been unable to buy visa/MC gift cards at places like safeway. Any idea where to get these now?

  23. Thanks, Darius. Unfortunately, in SF, all the grocery stores, CVS’s and Office Depots refuse to sell it with a CC – cash only.

  24. @Jerry
    What do you mean by call up new cards? Do you mean get totally new Visa Prepaid Gift card? Do we have to call and setup the Pin number every time? What’s usual amount after you ask for new card?
    Also, Questions: I live in Los Angeles. we have Ralphs (Kroger’s partner program something). if I get reloadable Visa Prepaid Gift card, am I eligible for 4X Fuel Points if I reload visa prepaid gift card?

    Also, Fee-Free Visa Gift card? I haven’t seen them before. I tried few times, but no luck. Please advise. Thanks in advance.

  25. has anyone used giftcards.com to buy Visa cards? Does BeFrugal pay cashback on these?

  26. Holiday gas stations sell Vanilla and Paypal for credit cards.

  27. Does anyone know what/if banks charge a cash advance fee for purchasing/loading the AAA Visa Travelmoney Reloadable card? Thanks!

  28. Can I load an AAA visa travel money card with an Amex gift card, and, if so, does AAA charge any reload fee?

  29. Captain Hooks

    I tried to buy a $500 mastercard gift card at walmart with a mastercard and it wouldnt go thru. Which gift cards can i purchase with a cc? Need wedding gift for tomorrow.

  30. My New Year’s resolution is to organize my day with a time management device which hopefully interact with my home and work computers.

  31. Looking at ebates.com and if you pick an American Express gift card it sends you to Amex’s website.

    1. If I used a Visa or MC to buy $1,000 card would this be treated as a cash advance?
    2. What about using Amex card?

  32. Used wisely and with all balances paid off when they’re due, a credit card or two
    generally is a great security web when traveling.