Can You Earn Credit Card Points From Gift Card Purchases?

Gift card purchases could be a great way to score extra rewards points, but it depends on your credit card.

Everyone who has a rewards credit card wants to maximize what they earn back. For those who think a little outside the box, this can lead to the idea of buying gift cards to earn more rewards.

The logic behind this strategy is that many credit cards earn a higher bonus rate at specific types of stores, so you could buy a gift card at a store where you’ll earn bonus rewards, and then use the card elsewhere.

Let’s say you have a card that earns five points per $1 at office supply stores and only one point per $1 at grocery stores. You could use that card for a $100 purchase at the supermarket and earn 100 points. Or, you could buy a $100 supermarket gift card for yourself at an office supply store and earn 500 points.

It seems like a smart way to earn more points. The only question is whether it works.

Do gift card purchases earn credit card points?

Whether you earn credit card rewards from gift card purchases will depend on the card that you have. Check the terms and conditions to see if they mention gift card purchases not being eligible to earn rewards.

Quite a few card issuers don’t have any language in their terms and conditions prohibiting this, but there are exceptions. The terms and conditions for some (but not all) American Express cards state that gift card purchases are not eligible for rewards. Wells Fargo includes the same language for its credit cards.

However, although it is not expressly prohibited by many card issuers, they may still block you if it seems as if you are abusing the system. 

Using gift cards to meet the spending minimum on a bonus

Another question you may have is whether gift card purchases apply towards the minimum amount you must spend to earn a new credit card’s sign-up bonus.

This isn’t a problem with most card issuers. If you’re short on the minimum spending for a sign-up bonus, you can buy gift cards to make up the difference. Just check your card’s terms and conditions first to verify that there’s no language prohibiting this.

Once again, American Express and Wells Fargo are notable exceptions. With their cards, it’s better to stay on the safe side and reach the spending minimum without gift card purchases. Otherwise, they could deny your bonus or claw it back later, which means they remove the bonus amount from your account.

Don’t risk your account for extra points

One important thing to know about buying gift cards with your credit card is that you shouldn’t overdo it just so that you can earn more cash back or travel rewards. 

If the card issuer believes that you’re gaming the system, it can close all your accounts and blacklist you from ever opening another account with them in the future.

So what’s considered gaming the system and what’s not? That’s all up to the discretion of the card issuer, but here are two examples to illustrate the difference:

• Jim shops at Whole Foods anyway, so he picks up a $100 gift card twice a month at an office supply store, where his card earns five points per $1. This is a savvy way to earn 1,000 points, and it’s unlikely to set off any alarm bells with his card issuer.
• Jane has a card that earns five points per $1 at office supply stores, so she buys a $500 prepaid debit card there every few days and earns 2,500 points each time. Her card issuer notes the frequency of these transactions and that the amounts are always the same. They also see that Jane is spending about $5,000 per month at office supply stores when she only reported $40,000 in annual income. They believe she’s taking advantage of their rewards program and rain death on her account.

The bottom line is that a gift card purchase here and there won’t be an issue, and it can help you score some extra points. It’s when consumers manufacture large amounts of spending that card issuers take notice and potentially decide to get rid of those clients.

For that reason, you should stick to buying gift cards that you plan to use. The last thing you want is to lose your credit card just because the card issuer believes you were gaming its rewards program.