What credit cards should you use to purchase gift cards?
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We’ve all been there — you’re not quite sure what to get family members and friends for the holidays, so you take the easy way out and buy a gift card from a popular retailer.
While it’s rarely a good idea to use credit card rewards to buy a gift card, you should maximize your gift card purchases by using the right credit card. Luckily, plenty of cards offer bonus rewards at places like gas stations, grocery stores, supermarkets, and office supply stores that sell gift cards to just about anywhere.
Best Credit Cards for Gift Cards
- Blue Cash Preferred® Card from American Express
- Chase Ink Business Cash Credit Card
- American Express® Gold Card
- Bank of America® Cash Rewards credit card
- Costco Anywhere Visa® Card by Citi
Comparing the Best Credit Cards for Gift Cards
|Card||Category bonus on merchants that sell gift cards||Return on Spend (based on TPG Valuations)||Current Bonus|
|Blue Cash Preferred® Card from American Express||6% cash back on up to $6,000 per calendar year (then 1%) at U.S. supermarkets; 3% back at U.S. gas stations||3%-6%||$250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.Terms apply.|
|Chase Ink Business Cash Credit Card||5% cash back (or 5x points) on the first $25,000 in spend at office supply stores each account anniversary year||5%-10%||$750 cash back or 75,000 points after you spend $7,500 on purchases in the first three months|
|American Express® Gold Card||4x cash back on up to $25,000 per calendar year at U.S. supermarkets; then 1x||8%||Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months. Terms apply.|
|Bank of America® Cash Rewards credit card||3% cash back on the first $2,500 per quarter in combined purchases in the category of your choosing (then 1%)||3%||$200 cash bonus after you spend $1,000 in purchases in the first 90 days of account opening|
|Costco Anywhere Visa® Card by Citi||4% cash back on the first $7,000 spent on eligible gas; 2% on all other Costco purchases||2%-4%||N/A|
Let’s take a look at the details of each of our top picks.
Annual fee: $95 (see rates and fees)
Welcome offer: $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
Why it’s great for gift card purchases: You’ll earn 6% cash back on the first $6,000 spent at U.S. supermarkets each calendar year (then 1%) and 3% back at U.S. gas stations. Gas stations also sometimes offer a solid gift card selection. The Blue Cash Preferred is a cash-back credit card, which is less valuable than Membership Rewards. But if you are a fan of cash-back rewards, 6% back on gift cards is as good as it gets, making the Blue Cash Preferred one of the best credit cards on the market today.
Keep in mind, though, that Amex sometimes doesn’t pay out category bonuses on gift cards, especially those made at grocery stores. It can be hit or miss when you use Amex cards, though the BCP does offer a great return on grocery store spending.
Check out our full Amex Blue Cash Preferred Card review.
APPLY HERE: Amex Blue Cash Preferred
Annual fee: $0
Sign-up bonus: Earn $750 (or 75,000 points) after you spend $7,500 in the first three months of account opening (worth up to $1,500 according to TPG valuations).
Why it’s great for gift card purchases: You’ll earn 5% back on office supply store purchases (on up to $25,000 in annual bonus spend). Office supply chains such as Staples are known for having a large selection of gift cards available for purchase, including many retailers that won’t earn rewards with other cards (meaning gift cards are the best way to earn rewards on those purchases).
That becomes even more lucrative if you also have a Chase Sapphire Preferred Card, Chase Sapphire Reserve or Chase Ink Business Preferred Credit Card. Then your 5% back turns into 5x Ultimate Rewards points that can be redeemed at a much higher value than cash back.
Still, the Ink Business Cash Credit Card is the best business credit card for office supplies on the market today.
Check out our full Chase Ink Business Cash review.
Annual fee: $250 (see rates and fees)
Welcome offer: Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months. (worth $1,200, according to TPG valuations). You may be eligible for a 75,000 point welcome offer for the card after you spend $4,000 in the first three months when you use the CardMatch Tool (offer subject to change at any time).
Why it’s great for gift card purchases: You’ll earn 4x on the first $25,000 spent at U.S. supermarkets each calendar year, then 1x point, which comes out to an 8% return. Supermarkets are another great place to pick up a variety of gift cards. Just remember that superstores like Walmart and Target are not included in the supermarket bonus category.
With a higher spending threshold for its bonus, you can use gift card purchases to meet that spending requirement while still earning rewards.
Like the Blue Cash Preferred, earning category bonuses on gift cards (especially when bought at grocery stores) can be hit or miss, so keep and eye out for earning patterns on your card.
Check out our full Amex Gold Card review.
APPLY HERE: Amex Gold Card
Annual fee: $0
Sign-up bonus: Earn a $200 cash bonus after spending $1,000 in the first 90 days of account opening
Why it’s great for gift card purchases: With the Bank of America Cash Rewards card, you can choose which category earns 3% back. This list includes drug stores, online shopping and home improvement stores — all of which are places you can find gift cards. You’ll also earn 2% back on grocery stores and wholesale clubs. There is a $2,500 cap on combined rewards spending per quarter (then 1%). Online shopping is an especially compelling category because you’ll be able to get cash back on digital gift cards from retailers such as a family member’s favorite online boutique, Etsy shops and other small businesses that may not sell gift cards at grocery stores.
If you qualify for the Bank of America Preferred Rewards program, you can actually earn anywhere from 3.75% back to 5.25% back on your chosen bonus category, and 2.5% to 3.5% at grocery stores and wholesale clubs. Considering this card comes with no annual fee, that’s a great cash-back return for gift cards.
Check out our full Bank of America Cash Rewards card review.
Annual fee: $0, if you have a Costco membership
Sign-up bonus: N/A
Why it’s great for gift card purchases: If you get gas at a place that also sells gift cards, you could earn 4% back with the Costco Anywhere Visa on eligible gas (on the first $7,000 per year; then 1%). Additionally, Costco sells a wide variety of gift cards, and you’ll earn 2% back across all Costco purchases. Of course, that’s not quite as high as some of the other options on this list, but it is worth mentioning.
The two downsides to this card are that you have to have a Costco membership to apply, and you only get rewards once a year in the form of a reward certificate.
Check out our full Costco Anywhere Visa review.
APPLY HERE: Costco Anywhere Visa by Citi
Can you buy gift cards with a credit card?
Yes, you can buy gift cards with a credit card. Most retailers will accept them, but your issuer may or may not let you earn rewards for this purchase, so make sure to check the stipulations regarding gift card purchases on your account beforehand. According to CNBC, up to $3 billion worth of gift cards goes unused every year. So while your loved ones may not be making the most of their gift card redemptions every holiday season, you can do your research and rest on the satisfaction that you at least received your credit card rewards from the purchase.
Why should I use gift cards?
The most obvious reason to buy gift cards is to use them as a gift to a friend or loved one, but there are also reasons why buying gift cards for yourself might be a good idea.
Gift cards operate like cash at most retailers, so using the gift cards themselves won’t earn rewards. So, you might be asking why I would suggest purchasing them to use. Wouldn’t it be better to use a rewards credit card for your retail purchase to earn rewards?
Unfortunately, a lot of retailers don’t fall into common bonus categories, which means you’d likely only end up with 1% or 1x on those purchases. But gift cards can be bought at locations that do earn rewards. If you buy a gift card to Nordstroms or Bass Pro Shop at Staples with your Ink Business Cash, that’s 5%/5x earned on those purchases instead of the 1%/1x you would earn otherwise.
Should I use rewards to buy gift cards?
Many credit cards allow you to redeem your rewards for gift cards, but it is rarely a good idea. When redeeming points or miles, you want to make sure that you’re getting a solid redemption value from each point/mile, and gift cards rarely give you the best value for your rewards.
When it comes to transferable currencies like Amex Membership Rewards or Chase Ultimate Rewards, you’re typically only getting between .7 cents to 1.1 cents of value from each point. Considering you can redeem Chase points at up to 1.5 cents each (if you have the Chase Sapphire Reserve) through the Chase travel portal or potentially at a much higher rate when you transfer to an airline partner, it doesn’t make sense to use your Ultimate Rewards balance to stock up on gift cards. Amex points are also easily worth more than 1.1 cents each when you maximize transfer partner redemption options.
There is an exception to this, though. Some credit cards offer fixed-value rewards, such as the Wells Fargo Propel American Express® card. With fixed-value credit cards, your rewards are worth the same amount, no matter how you redeem them. So, in that case, you could get the same value from buying gift cards as you would travel. Just keep in mind that if you’re using your rewards to buy the gift cards, you won’t get to reap the benefits of bonus rewards on your purchase. The information for the Wells Fargo Propel has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Using a portal to redeem gift cards
Buying gift cards is kind of like buying cash for a certain retailer, which means you can lose out on rewards when you redeem the gift cards. However, there is a way to double-dip on gift card rewards — online shopping portals.
Let’s say you use your Amex Gold to earn 4x on Ulta Beauty gift cards bought at your local U.S. supermarket (on the first $25,000 in purchases each calendar year; then 1x). You can then redeem that gift card at Ulta.com through a shopping portal (at the time of publication, the AAdvantage portal was offering 3x miles on Ulta purchases). So, where you would have gotten no rewards from restocking your favorite concealer and haircare products by buying in-store, you could get 4x Membership Rewards points and 3x AAdvantage miles.
Gift cards make easy, excellent gifts for picky friends and family members, and they can also help you maximize your own rewards and credit card strategy. Just make sure you’re using the best credit card to buy those gift cards, and always remember to use an online shopping portal whenever possible to redeem those gift cards.
Featured image by Summer Hull / The Points Guy.
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