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Buying gift cards with a credit card

You can usually buy gift cards with a credit card. But you might get hit with a cash advance fee and high interest rate, so look out!

Key takeaways

  • You can use your credit card to buy a gift card. But some card companies treat gift card purchases as cash advance transactions.
  • This means you may have to pay a cash advance fee and get charged interest at the higher cash advance rate.
  • It depends on your card, so check the fine print in the terms and conditions.

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 purchase one with your card.

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. If it is treated as a cash advance you'll know right away but still avoid the interest charge.

But if your card has a cash advance fee you'll still get charged that.

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.

⚠️ Keep in mind

The difference between a purchase and a cash advance transaction can 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.

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.

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 incur interest charges immediately. There is no interest-free period.
  • 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.
  • 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.

Frequently asked questions

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Editor

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 bio

Amy's expertise
Amy has written 579 Finder guides across topics including:
  • Credit cards
  • Frequent flyer
  • Credit score
  • BNPL
  • Money management
  • Sustainability

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