Buy Gift Cards Using Credit Cards

There are many reasons to buy gift cards with a credit card, including convenience. If you’re buying groceries at the supermarket and planning to pay with plastic, for example, there’s no reason not to add a gift card you need for an upcoming event to your cart. Aside from gift card purchases for occasions like birthdays or teacher gifts, some people buy gift cards with a credit card to earn rewards or save money on a specific purchase.

What is a Credit Card

A credit card is a payment card issued by a financial institution, such as a bank or credit union, that enables cardholders to borrow funds up to a predetermined credit limit to make purchases. Unlike debit cards, which draw funds directly from the cardholder’s bank account, credit cards allow users to access a line of credit provided by the card issuer. This borrowed money must be repaid within a specified timeframe, typically every month, to avoid interest charges and maintain the card’s good standing. Credit cards offer users flexibility and convenience in making purchases, both in-person and online, at millions of merchants worldwide.

Types of Gift Cards You Can Buy with a Credit Card

Before jumping to purchase gift cards using your credit card, try to understand the type of gift card you can buy with a credit card:

1. Retail Gift Cards

Specific stores issue these categories of cards, and they are often called merchant gift cards. They are designed for use only at the issuing retailer. These include gift cards, Steam gift cards, Apple gift cards, etc. A key benefit of retail cards is that they typically do not come with activation or service fees.

2. Prepaid Network Gift Cards

This is a unique kind of card formerly backed by some major payment networks like Visa or Mastercard. Unlike retail cards, they can be used almost anywhere these networks are accepted, giving them broader flexibility. However, they usually include a purchase fee, which can range from $2.95 to $5.95 at the time of buying. Retail and prepaid network cards are available as physical or digital cards, giving you options based on your preference or the recipient’s needs.

The Functionality of Credit Cards

On the other hand, credit cards are payment cards issued by financial institutions, enabling cardholders to borrow funds up to a certain limit to make purchases. Unlike gift cards, credit cards involve a line of credit extended to users, which must be repaid within a specified timeframe to avoid interest charges. Credit cards offer flexibility and convenience, allowing users to make purchases online, in-store, and internationally, with the added benefit of rewards programs and consumer protections.

Why Use a Credit Card to Buy Gift Cards? 

Honestly? It just makes sense most of the time: 

Convenience is King: Swiping your card at CVS or clicking “buy” online is way faster than hunting for cash. Especially when you need that digital e-gift card now because your Aunt’s birthday Zoom call starts in 10 minutes.  

Digital Life: How e-gift cards work is perfect for our busy lives. Buy it online, it zips straight to their email or phone – no worrying about losing the plastic card in your junk drawer. Great for friends or family far away, too. (Though, if you do lose a physical card, knowing how to trace a gift card or report a lost gift card is key!). 

Last-Minute Lifesaver: Forgot a teacher appreciation gift? Need a quick wedding present? A gift card bought with your credit card is often the easiest save. 

Why Purchase Gift Cards With a Credit Card?

If you’re considering buying a gift card for birthdays, surprises, holidays, or to give a loved one a special treat, using a credit card is a smart way to go about it. It makes the process easy, flexible, and highly rewarding. Here’s why: 

1. Convenience

You can buy a gift card with your credit card from the comfort of your home and skip the hassle of queuing in a physical store or traveling a long distance to buy a gift card. With your smartphone or computer, you can buy any gift card online without stopping by an ATM to get cash or visiting a store. Whether you’re in bed, on your lunch break, or relaxing at home in your pajamas, you can grab these gift cards with a few clicks using your smart gadget.

2. Discounts

You can earn some discounts using certain credit cards. You can earn discounts or perks when you buy gift cards. For example, if you have a Target RedCard, you can get 5% off on gift cards that work at theme parks, restaurants, or major retail stores. It might seem like a small percentage, but as you buy, it adds up. Imagine how much you can amass when you purchase multiple cards.

3. Reward Opportunity 

Credit cards allow users to earn rewards when they make a purchase. This is one of the amazing benefits of using a credit card. However, a couple of credit cards have yet to include gift card purchases in their rewards scheme, but many do. Depending on the card you use and the associated rules, you can earn cash back, airline miles, or reward points every time you buy a gift card. You can redeem these rewards later for statement credits, free flights, accommodation/hotel reservations, or even more gift cards. It’s like getting paid a tiny bonus for expenses you already planned to do.

4. Split Cost

Gift cards can become really expensive during holiday periods, because of the rush. Many people worldwide buy simultaneously for travel, hotel reservations, restaurant arrangements, etc. Credit card companies allow you to split the cost over time, and you can pay by installment. This brings flexibility and helps to make your budgeting a lot easier; that way, you don’t have to spend all your money at once in one transaction.

Key Differences Between Gift Cards and Credit Cards

While gift cards and credit cards may share some similarities in their physical appearance and usage, several fundamental differences set them apart:

1. Payment Method: Gift cards represent prepaid funds that can only be used to make purchases up to the card’s value. In contrast, credit cards enable users to borrow money from the issuing bank or financial institution, subject to repayment terms and interest rates.
2. Financial Liability: With gift cards, the financial liability rests solely with the issuer, as the funds are prepaid by the purchaser or the entity providing the gift. Conversely, credit card transactions involve the cardholder’s obligation to repay the borrowed funds, along with any applicable interest fees.
3. Credit Reporting: Using a credit card responsibly can positively impact an individual’s credit history and score, as payment activities are reported to credit bureaus. In contrast, gift card usage does not affect credit scores, as there is no borrowing or repayment involved.
4. Regulatory Oversight: Credit cards are subject to stringent regulations and consumer protection laws, including the Truth in Lending Act (TILA) and the Fair Credit Billing Act (FCBA), which govern billing disputes and unauthorized charges. While gift cards are also regulated to ensure consumer rights and transparency, the regulatory framework differs from that of credit cards due to the prepaid nature of funds.

Where to Buy Gift Cards With a Credit Card 

1. Amazon

It is a good place to buy gift cards with a credit card, and they don’t just offer users a library of their unique gift cards, but also offer third-party retailer cards. Amazon allows various credit cards, including Visa, Mastercard, American Express, and Discover. They also provide customers with convenient instant email delivery or physical card options.

2. Target Store

You can buy gift cards from Target using a credit card. They sell Target cards and various third-party options like Google Play, Starbucks, and Xbox. You can effectively process credit card payments, even with the Target REDcard, and expect swift delivery for both digital and physical gift cards.

3. Walmart

Walmart is a top e-commerce brand offering digital and plastic gift card services. You can expect to buy Walmart’s unique cards and cards from popular brands like Netflix, Uber, and Steam. Users can securely pay for their cards using Visa, Mastercard, American Express, or Discover and choose between home delivery or email delivery for select cards.

4. PayPal Digital Gifts

PayPal Digital Gifts allows users to send digital gift cards for brands like Uber, PlayStation, and Apple. You must link your credit card to your PayPal account and complete your purchase within seconds. The cards are sent to the recipient’s email or inbox promptly.

5. Xbanka

Xbanka offers gift cards for its electronics store and gaming, streaming, and entertainment brands. Users can purchase these cards using credit cards like Visa, Mastercard, and American Express. Depending on your delivery preference, eGift cards and physical versions are available.

How to Buy a Gift Card with a Credit Card

Buying a gift card with a credit card is fast and straightforward. The following steps will guide you to purchase gift cards with a credit card:

Step 1: Choose the Type of Gift Card

Decide whether you want a store-specific card (like Amazon or Walmart) or a general-purpose card (like Visa or Mastercard).

Step 2: Pick a Platform

Go to a trusted store or website like Amazon, Walmart, Target, or Xbanka

Step 3: Select the Card

Choose the brand, set the amount, and add the card to your cart.

Step 4: Proceed to Checkout

Click “checkout” and enter your billing details.

Step 5: Pay with Credit Card

Enter your credit card number, expiration date, and CVV. Make sure your billing address matches your card info.

Step 6: Confirm & Complete

Review your order and submit payment. You’ll receive the card via email or mail, depending on your choice.

Common Misconceptions About Gift Cards

Despite the clear distinctions between gift cards and credit cards, misconceptions persist, leading some consumers to conflate the two:

1. Universal Acceptance: One common misconception is that gift cards can be used universally, like credit cards. While many gift cards are accepted at a wide range of retailers and online merchants, they may be subject to restrictions or limitations based on the issuer’s terms and conditions.
2. Credit Building: Some individuals erroneously believe that using gift cards can help build or improve their credit scores. However, since gift cards do not involve borrowing or credit reporting, they have no impact on credit history or scores.
3. Interest Charges: Another misconception is that gift card usage incurs interest charges similar to credit cards. In reality, gift cards represent prepaid funds, so there are no interest charges associated with their usage.

Reasons why you should buy gift cards with a credit card

1. Earn points

Using a credit card to purchase gift cards can be advantageous if you have a rewards program associated with your card. By making gift card purchases, you can earn reward points, cashback, or other benefits your credit card issuer offers. It’s an excellent way to maximize your rewards while buying presents.

2. Expand bonus

Some credit cards provide bonus rewards or higher cashback percentages for purchases made within specific categories. If the retailer selling the gift card falls under these bonus categories, using your credit card can help you earn more rewards than cash or a debit card.

3. Anticipated spending

If you anticipate future purchases from a particular retailer, buying a gift card with your credit card can be smart. It allows you to take advantage of any ongoing promotions, discounts, or rewards associated with your credit card. Furthermore, it helps you budget and allocate funds specifically for that retailer.

4. Offer benefits

Certain credit cards offer additional benefits or protections for purchases made with them. These benefits include extended warranty protection, purchase protection against damage or theft, or price protection. By buying a gift card with your credit card, you extend these benefits to the recipient.

Why you might not want to purchase gift cards with a credit card

There’s nothing wrong with paying for gift cards with a credit card, but you should know about potential pitfalls that can apply. Those pitfalls can include:

• Gift card limits: Some retailers limit the number of gift cards you can buy when you pay with a credit card. If you’re unaware of these policies, and you head to the register with a stack of gift cards in hand, you may not be able to buy them all.
• Threats about not earning rewards: Some rewards credit cards also claim in the fine print that you won’t earn any cash back or points. With certain American Express cards, for example, the terms and conditions state you earn rewards on “eligible purchases,” which do not include “fees or interest charges, cash advances, purchases of traveler’s checks, purchases or reloading of prepaid cards, purchases of gift cards, person-to-person payments, or purchases of any cash equivalents.” But even cards that have this in the fine print will sometimes still earn points on these purchases, so the issuer’s rules can be unclear.
• Costly credit card interest: Finally, you shouldn’t buy gift cards with a credit card if you plan to carry a balance. If you do, the interest rates you’ll pay will wipe out any rewards you earned.

Things to Watch Out for When Buying Gift Cards with Credit Cards 

Keep these in mind to keep it smooth: Your Credit Card’s Fine Print: That cash advance policy? Crucial, especially for Visa/Mastercard buys. A quick call to your bank can save you cash. (The invention of gift cards was genius, but the rules? Not always simple. 

Store Rules Rule: Don’t assume! Some stores limit how many gift cards you can buy with a credit card, the dollar amount, or block certain types entirely. Just ask or look for a sign. 

Scams Suck: Only buy from places you trust – big stores, official brand websites, legit marketplaces (Send Credit, etc.). Skip random sellers on Facebook Marketplace. Check cards for scratches or tampering before buying. If something seems too good to be true (like gift cards), it probably is. 

Lost Cards & Refunds: If a gift card gets lost or stolen, contact the gift card company fast. Your credit card company usually can’t help recover the funds. Know how to trace a gift card or check its balance online beforehand. Refunds on gift card purchases can be tricky, too. 

Fees Happen: Prepaid Visa/Mastercards often have an upfront fee ($3-$7). Some even charge if you don’t use them fast enough. Factor that in! Also, if gifting internationally, double-check if gift cards work internationally for that brand. 

Stacking Cards: You usually can’t get a gift card using a gift card at most regular stores. Save that gift card balance for shopping! 

Drawbacks to Keep in Mind Before Using a Credit Card to Buy Gift Cards

Buying gift cards with a credit card might seem like a smart move, but there are a few things you should think about before you go for it. I’ve learned some of these hard, so trust me—these details matter.

1. Not all credit cards give rewards for gift card purchases

This one surprised me. I once used my Citi Double Cash Card to buy a gift card, expecting to earn my usual 2% cash back—but I got nothing. Some credit cards don’t give you rewards when you buy gift cards. If that’s important to you, check your card’s terms before you buy.

2. Gift cards might not count toward your welcome bonus

If you just got a new credit card with a big sign-up bonus, don’t assume gift card purchases will help you reach the spending requirement. Some cards, like the American Express Gold Card, don’t count gift cards toward that bonus. I remember getting excited about hitting my spending goal early, only to discover that $300 in gift cards didn’t count.

3. Watch out for cash advance fees

Here’s where it gets expensive. Some credit cards (especially ones tied to specific stores) treat gift card purchases like cash advances. That means higher fees and sky-high interest rates. For example, the Sephora Visa Credit Card charges you $10 or 3%, whichever is more, just for buying the card, and then slaps you with a 32.99% APR. That’s money you could’ve spent on actual gifts.

4. You could end up paying more in interest

Unless you immediately pay off your full balance, the interest on your purchase can build up fast. As of August 2023, the average credit card interest rate was 22.17%, and that’s for regular purchases. If your card treats gift cards like a cash advance, the interest kicks in immediately, with no waiting period. So even if you pay off the full balance later, you’ve already racked up charges. I once let a small balance carry over from a holiday shopping spree, and by the time I cleared it, I’d paid nearly $50 extra in interest. It was a wake-up call.

Consumer Protections and Liabilities

Understanding the distinctions between gift cards and credit cards is essential for consumers to make informed financial decisions and protect their rights:

1. Fraud and Unauthorized Charges: Credit card users benefit from robust fraud protection measures, including zero-liability policies for unauthorized transactions. While gift cards may offer some level of protection against fraud and loss, the extent of coverage varies among issuers and may be less comprehensive than credit card protections.
2. Expiration and Fees: Gift cards may be subject to expiration dates and fees, such as maintenance fees or inactivity fees, which can diminish their value over time. Credit cards typically do not expire and may have fewer associated fees, although annual fees and interest charges may apply depending on the card’s terms.
3. Dispute Resolution: Credit cardholders have recourse to dispute unauthorised charges, billing errors, or merchant disputes through established procedures outlined in consumer protection laws. Gift card users may encounter limitations in dispute resolution, depending on the issuer’s policies and regulatory requirements.

Tips to Maximize Your Gift Card Purchase 

A few quick tips to get the most out of your money: 

1. Rewards Power: Got a card that gives extra cash back at supermarkets or drugstores? Use it there to buy gift cards and double dip. 
2. Cashback Apps: Stack deals! Use apps like Rakuten or Capital One Shopping while buying gift cards online to earn extra cash back on top of your credit card rewards. 
3. Look for Deals: Sometimes marketplaces sell gift cards for slightly less than face value. 

Conclusion

Buying gift cards online with a credit card offers ease, security, and speed; it also allows you to be smart with your purchase. You get the joy of gifting, the satisfaction of rewards, and the ease of instant delivery. Whether shopping from home, sending love abroad, or accumulating travel miles, this is a money-smart move. Are you considering exchanging or selling your gift card for cash? Xbanka is a trusted platform that allows you to access funds and use them however you choose—whether to buy a preferred gift card or spend directly.

FAQ

1. Can I buy a $500 gift card with a credit card?

Yes, you can buy a gift card with a credit card. I did it so many times. I had bought a gift card ( for dining at any of the restaurants, show the picture there )or a movie gift card for a birthday gift, or for a  Christmas gift, or for a thank you gift!

2. Can I purchase gift cards online with my credit card?

Typically, you can use a credit card to buy gift cards. But you may want to first check whether your issuer classifies it as a cash advance or whether you can potentially earn rewards on the purchase.

3. Where can I buy a Visa gift card with a credit card?

Yes, you can buy Visa gift cards with a credit card online through Visa and at several other stores. Retailers such as Walmart, Staples, and Target allow people to buy Visa gift cards using a credit card, while others, such as Save Mart, only let people buy Visa gift cards using cash or debit cards.

4. Can you buy gift cards with a Discover credit card?

You can buy most store gift cards and bank-issued gift cards with a credit card. You may also be able to buy a prepaid card with your credit card.

5. Can I buy an Amazon gift card with a credit card?

Yes, most credit cards allow you to purchase gift cards, but it’s important to check your card’s terms and conditions, as policies can vary.

6. Can I use my credit card to buy online?

Key points on using your credit card online. Make sure you understand all costs, stock availability, ty and delivery timescales. Keep a record of all transactions and check them against your monthly statements. Keep track using online services, like Internet Banking or the Mobile Banking app.