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Buying gift cards with a credit card

You can usually buy gift cards with a credit card, but you could be charged a cash advance fee and get no reward points. Here’s what you need to know.

If you need to get someone a present and don't know what they want, gift cards are a quick win. You can buy one online or in a shop – and can make it thoughtful by choosing a card you know the person will use.

But if you use your credit card to buy gift cards, the payment could be processed as a cash advance transaction rather than a purchase. This is because gift cards can be classified as a type of "stored value card", which some banks and lenders include in their definition for cash advances. But it does depend on the credit card, as well as factors including the type of gift card and where you buy it.

How can I avoid extra charges when buying gift cards?

1. Check your credit card's definition of a "cash advance"

Most credit cards don't specifically include gift cards in their definition of a "cash advance transaction". But "stored value cards" are included in the definitions provided by some banks, including ANZ, Westpac and Bankwest. As gift cards are a type of stored value card, you should double-check before you go shopping so that you can plan your repayments around any extra rates or fees.

2. Repay your credit card balance straight away

If you're not sure if buying a gift card will be treated as a cash advance and want to find out, another option is to buy a low-value gift card with your credit card then repay it straight away. That way, you can avoid interest if it is treated as a cash advance (but will still pay a cash advance fee). And if it's not a cash advance, you can purchase other gift cards in a similar way.

3. Pay for gift cards with a debit card or cash

Buying gift cards with your debit card or cash won't attract any cash advance fees or interest rates. And if there are items you want to buy with your credit card, you could buy them separately before paying for your gift cards.

4. Redeem gift cards using reward points

If you're a member of a frequent flyer or rewards program, you could use points to redeem gift cards for people instead of paying for them. Just be aware that this usually isn't the most valuable way to use points.

5. Consider a credit card that offers the same interest rate for all spending

If you really don't want to juggle cards while you're out Christmas shopping, another option is to look at a credit card that offers the same interest rate for all transactions, such as the Bank Australia Low Rate Visa. This could make it easier to keep track of interest charges and budget for repayments, although you're still likely to be charged a cash advance fee when buying gift cards.

⚠️ Keep in mind

The difference between a purchase and a cash advance transaction can technically be influenced by the business where you use your credit card.

For example, if you bought a gift card from a newsagent that was set up as a "merchant that sells lottery tickets" as its main form of business, there is a greater chance of the transaction being considered a cash advance than if you bought a gift card from a supermarket. So it can depend on the main form of business for a merchant and how it is classified by Visa, Mastercard or other merchant services.

What happens if a gift card is processed as a credit card cash advance?

  • You’ll be charged a cash advance fee

Cash advance transactions typically attract a fee worth around 2-3% of the total that you spend. This means if you use your credit card to pay for a $100 gift card, you could be charged an extra $2 to $3.

  • Interest will be charged immediately

Cash advance transactions start collecting interest from the time they are made. Most credit cards also have a cash advance interest rate that is higher than the purchase rate, so you could end up paying more for gift cards than you would for other presents that cost the same amount (but are processed as purchases on your card).

  • You won’t earn rewards

Cash advance transactions usually don’t earn points per $1 spent. They also don’t count towards the spend requirement for any bonus point offer you may get with a new rewards credit card.

  • Your transaction won’t be eligible for a 0% purchase rate

While an interest free credit card that offers 0% p.a. interest on purchases during the introductory period can help you save on interest charges for most of your shopping, these offers generally don’t extend to cash advance transactions.

  • It could affect how your balance is paid off

Credit card repayments typically go towards the part of your balance that attracts the highest interest rate first.

So, if you have a credit card offering 0% p.a. on purchases and you use it to buy gift cards, your repayments could go towards the gift card balance first because this type of transaction is considered a cash advance. This could mean you end up with debt from your purchases at the end of the 0% interest period, resulting in even more interest charges.

Finder survey: Which credit card features would Australians from different states like to understand better?

ResponseWAVICSAQLDNSW
None of the above45.76%40.61%45.33%43.29%38.18%
Rewards programs34.75%36.86%36%37.66%38.18%
Interest-free days20.34%25.6%26.67%21.21%27.64%
Balance transfers19.49%18.77%13.33%22.08%20.51%
Cash advance16.1%12.97%17.33%16.02%21.65%
Minimum payment14.41%12.29%13.33%9.52%15.38%
Purchase rate14.41%14.33%10.67%17.32%20.51%
Statement period14.41%10.92%12%11.69%15.1%
Other0.85%0.34%0.43%0.28%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
Data for ACT, NT, TAS not shown due to insufficient sample size. Some other states may also be excluded for this reason.

Frequently asked questions

Can I buy a gift card with a gift card

If you have a Visa or Mastercard gift card with enough value on it, you may be able to buy a different gift card with it. But it depends on the gift card terms and conditions, as well as the business that is selling the new gift card.

For example, some gift cards state that you can't use them for ATM withdrawals or cash out at the shops, and others state that you can't get a cash advance. Check the gift card terms and conditions to see if it's possible with a gift card.

Can a gift card be used as a credit card

You can spend Visa and Mastercard gift cards at many of the same places you can use a credit card, but they are not the same thing. A gift card is a prepaid account and, unless you have a reloadable gift card, eventually you'll run out of funds or the card will expire. Credit cards, on the other hand, can be used on an ongoing basis when you pay off the balance.

Some businesses will process gift card and credit card payments differently as well. So, for example, if you wanted to use a gift card for recurring payments, you'd need to check if it was accepted by the business. If it wasn't, you'd need to choose a regular debit card or credit card for the payment.

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Written by

Amy Bradney-George

Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full profile

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