Can you buy gift cards with a credit card?

Because gift cards can be used like cash, you might wonder if you can buy them with credit cards. The good news: retailers usually allow it. Just watch out for the possibility of declined transactions, and avoid cash advances when possible.

Can I buy gift cards with a credit card?

Yes, you can use a credit card to buy gift cards at most retailers. Occasionally, this won’t be allowed for a variety of possible reasons — for example, store-specific policies or a flagged transaction from your card issuer.

Buying gift cards with your credit card is usually coded as a purchase rather than a cash advance, though there may be exceptions.

Related: Why do I want to avoid a cash advance?

What to expect when you buy gift cards with a credit card

While you’ll usually have no trouble using your credit card to buy gift cards, once in a while you may run into a few hiccups. Here are a few common instances to watch out for:

You may be asked for your photo ID.

Some stores will ask that you show a matching ID when using a credit card to buy gift cards. By matching a name and face to the credit card, stores make it more difficult for people to use stolen cards for these transactions.

The transaction may be declined due to store-specific policies.

You could run into any number of responses at the checkout counter:

• A credit card ban may be implemented throughout all stores in a chain.
• Credit cards may not be allowed at the specific store you’re in if it’s a prime target for fraudsters.
• You may even get unlucky and be matched with a clerk who mistakenly tells you the wrong store policy.

The easiest way around these roadblocks? Try a different store. If you’re feeling lucky, you could try the transaction again with another clerk at the same store.

Your card issuer may flag the transaction.

In this case, the transaction will be halted, and you’ll need to verify on your mobile device that you initiated the purchase. If the notification comes quickly enough, you may be able to proceed with the transaction at the counter. Otherwise, you’ll need to cancel the purchase and try again after you’ve verified it with your issuer.

One way to get around this limitation is by carrying a backup credit card. This card might not offer the rewards you were hoping for, but it may save you from having to try the transaction again.

Finder survey: Which credit card features do people feel they have a strong understanding of?

Is using my credit card for gift cards considered a cash advance?

The answer is usually not. Buying a gift card with a credit card is usually considered a purchase. However, this transaction could be coded as a cash advance in certain instances, such as when:

• You buy a prepaid card.
  Products such as Visa Gift Cards and Mastercard Gift Cards are sometimes considered cash equivalents, especially as they can be used virtually anywhere credit cards are accepted. You’ll rarely have this problem with closed-loop gift cards, because they can be used only at the stores they’re issued under.

• You buy a gift card at a financial institution.
  If your card issuer generally codes a merchant’s services as cash advances, your gift-card purchase may fall under this category as well.

How to avoid cash advances when buying gift cards with your credit card

If you’re worried about cash advances, try these strategies:

• Contact your card issuer.
  Your issuer may be able to tell you outright if you’ll need to worry about cash advances.
• Turn off cash advances for your credit card.
  If your issuer allows this, any cash advances will simply be declined when you use your credit card for them.

What credit cards can I use to buy gift cards?

You can buy gift cards with just about any kind of credit card. Here are a few ideas:

Buying gift cards with grocery store credit cards can be a great choice. This is because grocery stores can offer a wide selection of gift cards, and certain cards offer strong rewards at these locations.

Cashback credit cards can be useful as well, occasionally offering bonus rewards in categories such as grocery stores and Amazon.com.

As with all cards, be sure to learn their bonus-reward rules for gift card purchases.

Dive deeper: Compare credit cards in Canada

Can you earn rewards when buying gift cards with a credit card?

Yes, you can earn rewards on gift card purchases with your credit card. One of the best strategies is to use a rewards credit card that will allow you to earn points or travel credits.

Pro tip: Double check if you earn bonus rewards on gift cards

Before applying for a credit card or using one for a gift-card purchase, read the fine print. Check if the credit card offers bonus rewards on gift cards as some providers specifically block bonus rewards on these purchases.

Will my issuer close my credit card for buying gift cards?

Issuers typically consider gift cards to be legitimate purchases, but tread lightly if you’re dipping your toes into manufactured spending. This means buying things with your credit card that can be quickly converted to cash — such as gift cards.

Those engaging in manufactured spending may buy gift cards regularly in significant quantities. It’s this volume that typically raises flags with card issuers and leads to account shutdowns.

Ultimately, if you’re buying gift cards for manufactured spending, your issuer may eventually catch on and close your account. But if you buy gift cards here and there — particularly if you plan on giving them as presents or using them yourself — you’re probably just fine.

Bottom line

Though policies may vary by store and card issuer, you can usually use a credit card to buy gift cards. Avoid having your gift-card purchases classified as cash advances, and be careful with manufactured spending. Take advantage of rewards programs by using a credit that gives you points for purchases.

Related: Best credit cards in Canada

Frequently asked questions

• Why are cash advances not recommended?

  For each cash advance, you’ll pay a fee — typically $10 or up to 5% of the transaction. You’ll also usually pay a higher interest rate. Learn more here.

• Does buying gift cards come with fees?

  Closed-loop gift cards usually don’t come with extra fees. But if you buy a prepaid gift card, such as a Visa Gift Card, you’ll usually pay an activation fee of around $3 to $5.

• Where can I learn more about manufactured spending?

  Our guide to meeting your credit card’s minimum spend has a few strategies for manufactured spending. While manufactured spending isn’t illegal, card issuers generally frown upon it. Use it with caution.