Can You Buy Gift Cards with a Credit Card?

Gift cards are characterized in the retail industry as “closed loop” or “open loop.” The distinction is important because the card types have very different applications. Closed-loop means the gift card can only pay for purchases at one retailer. Open-loop cards, typically from major credit card companies or financial institutions, can be used like debit cards to make purchases virtually anywhere: online or in-store. When you purchase an open-loop gift card, you may incur small purchase fees, depending on the card’s value.

Both closed and open loop gift cards generally can be purchased with a credit card, but each retailer has its own guidelines. To minimize processing fees, some stores may require you to pay for gift cards using a debit card or cash. Some retailers even offer online-only e-gift cards. Sometimes buying open-loop cards could take more effort. So, it can make a lot of sense to think through where your intended recipient shops, and the brands they like or dislike. That might help you zero in on a closed loop gift card you can easily buy with your credit card.

Beyond that, though, in-store and online merchant policies on gift card purchases vary widely, and the terms and conditions can be tough to find.

The guidelines, restrictions, and fees you must navigate to purchase a gift card with credit depend on the retailer, your credit card issuer, and the company issuing the gift card.

While large chain retailers, like drugstores and big box stores, usually allow shoppers to buy gift cards with credit cards, smaller shops may not. Credit card purchases can come with significant processing fees for merchants or even leave them vulnerable to fraud, so some retailers opt-out. Merchants that accept credit cards might ask you to show a photo ID before you complete the purchase. Store rules may also limit your gift card purchase to a specific dollar amount or a set number of cards.

Credit card issuers also may have some guidelines and restrictions related to gift card purchases. If you’re strategic, buying gift cards could help you earn rewards. For example, if your credit card offers rewards at restaurants, but you prefer to cook at home, you might purchase gift cards from restaurants to give as gifts. However, it’s always important to read the fine print. Some credit card companies may not count open-loop gift card purchases toward rewards. 

Similarly, not all store credit cards allow you to earn rewards on their own gift card purchases. While buying a few gift cards could get you closer to a minimum purchase threshold for promotions, spending hundreds of dollars on gift cards will likely raise a red flag to your credit card provider. It’s best to proceed with caution; your creditor may retract rewards or even freeze your account if they suspect any suspicious activity.

Each gift card issuer—the retailer your gift card is for—may also impose guidelines and fees. Fortunately, most extra costs shouldn’t catch you off guard, as federal law requires that issuers list service fees on the card itself.² You might find other guidelines, like terms and conditions, on the packaging, in any paperwork that comes with the card, or online.

You could buy gift cards with credit at myriad retailers, like gas stations, grocery stores, and retail giants like Target or Walmart. In fact, at larger stores, you might find displays containing dozens of closed-loop cards for not only the store itself but other retailers, restaurants, movie theaters, streaming services, airlines, and more. They may also have open-loop cards from several financial institutions. Values may vary from $5 to $500, usually with a small activation or service fee. Once you choose a card, you can purchase it along with your other goods.

Online, things may look a bit different. Shoppers could order from many retailers’ entire selection of open-loop and closed-loop gift cards for delivery from the comfort of the living room. Other stores, however, might provide a list of available gift cards but require you to pick them up or buy them in person. Some grocery and drug store chains may not list any of their third-party gift card stock online, as each location sometimes carries a different selection.

If you’re struggling to find the right gift card, you could almost always go directly to the source. For example, if you hope to buy a Starbucks gift card for a friend’s birthday, you could choose from a vast selection of designs on their website or in the café.

There are three more factors to consider as you seek to buy gift cards with your credit card:

• Credit card terms and conditions
• Security chips
• Scams

Some observers warn to check your credit card terms and conditions for buyer do’s and don’ts that could include rules against certain types of gift card purchases.³ Security is a concern that stops some merchants, especially small businesses, from accepting credit cards for gift cards if they don’t have terminals that read the security chip embedded in most current cards.⁴ This plays a role because before security chips took hold in 2016, many stores totally refused credit card purchases due to the potential for fraud. Meanwhile, the Federal Trade Commission advises consumers buying gift cards with credit cards to shun auction and some discount sites to avoid gift card scams. It’s best to buy gift cards from “sources you know and trust,” the agency says.⁵