At O1ne Mortgage, we prioritize your financial education and aim to provide you with the best advice to make informed decisions. In this article, we will explore the concept of buying gift cards with a credit card, the potential benefits, and considerations to keep in mind. If you have any mortgage service needs, feel free to call us at 213-732-3074.

Reasons to Buy a Gift Card With a Credit Card

Gift cards are simple, versatile, and easy to buy. Here are some compelling reasons to use your credit card for purchasing gift cards:

Earn Rewards

Many credit cards offer cash back, miles, or points on purchases. By buying gift cards with your rewards credit card, you can maximize the rewards you earn, especially for special occasions like birthdays or holidays. Accumulated rewards can be redeemed for statement credits, account deposits, flights, hotel stays, and more, depending on your credit card’s rewards structure.

Earn a Welcome Bonus

As a new cardholder, you can often snag a lucrative welcome bonus by meeting the minimum spending requirements in the first few months of card opening. Buying gift cards with your credit card is one way to meet the spending criteria. Some credit cards offer a welcome bonus high enough to cover a flight or hotel stay, making it a win-win for you.

Take Advantage of Limited Offers

Certain rewards credit cards feature rotating bonus categories, which allow you to earn higher rewards on specific purchases. Buying gift cards from qualifying retailers, like a home improvement store or restaurant, is one way to take advantage of the bonus categories. Make sure you read the terms and conditions for any exclusions that may apply to gift card purchases.

Convenience

Your credit card is often the most convenient payment method, especially when it’s your only payment option or you’re already using your credit card to purchase other items during your shopping trip. Using your credit card to buy gift cards means you can stick to a single payment method.

Is Buying Gift Cards With a Credit Card Considered a Cash Advance?

Buying a gift card with a credit card generally isn’t considered a cash advance, but it could be with certain card issuers. If your card issuer treats gift card purchases like a cash advance, it’ll cost you more than you think. That’s because cash advances are charged a cash advance fee and a higher interest rate. There’s no grace period for avoiding finance charges, even if you pay your balance in full.

To be on the safe side, check your credit card agreement or contact customer service to confirm whether buying a gift card with your credit card would be treated as a cash advance.

Is It a Good Idea to Buy Gift Cards With a Credit Card?

Buying gift cards with a credit card can be good for earning rewards just like any other purchase, as long as gift card purchases aren’t excluded. However, there are some considerations to keep in mind:

Rewards Exclusions

Some credit cards consider gift card purchases as cash equivalent transactions and therefore may not allow you to earn rewards on your purchase. In addition, you may lose the ability to earn rewards if you’re suspected of abusing or gaming the rewards program. To keep your rewards privileges, buy gift cards as needed rather than trying to game the system.

Loss of Purchase Protections

You may lose some flexibility and purchase protections when you buy gift cards with a credit card. For instance, you’ll lose your ability to dispute fraudulent or unauthorized transactions. Gift cards don’t come with benefits like extended warranty and purchase protection.

Retailer Restrictions

Some stores may limit or restrict the purchase of gift cards with a credit card. With these retailers, you’ll have to use another form of payment.

Debt Management

Be cautious about purchasing gift cards thinking it’s free money. If you’re not careful, you could overspend and get into more debt than you can handle. As a rule of thumb, you should only use your credit card to spend what you can afford to pay back. Then, pay your balance in full and on time each month to avoid interest and penalty fees. Otherwise, the additional costs could offset the rewards you earn.

The Bottom Line

Gift cards are a convenient purchase with a variety of uses. You can purchase them as gifts or even use them as a budgeting tool. If your card issuer allows it, you’ll earn rewards when you buy gift cards with a credit card.

Don’t have a rewards credit card? Check out some of your options to start earning rewards on your purchases. And remember, for any mortgage service needs, O1ne Mortgage is here to help. Call us at 213-732-3074 to speak with one of our expert loan salespersons today!