Buying Gift Cards? How I Use the Right Credit Cards to Earn Extra Rewards

When you use the right credit card to pay for your gift card purchases, you might earn 2, 3, or even 5 times the rewards.

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Using a rewards credit card when you buy gift cards can help you earn valuable points, miles or cash back perks this holiday season.

Yet all rewards credit cards aren’t equal. One card might give more rewards for dining or travel purchases, while another card might reward you more for grocery or gas purchases. If you want to maximize your reward-earning potential, it’s important to choose the right credit card for each purchase.

SAVE: Earn Free Travel With the Chase Sapphire Preferred

Personally, I try to never use a credit card that gives me just 1 point per purchase (or 1% cash back) for any transaction. While you won’t find a credit card that pays higher rewards specifically for gift card purchases, there are several cards that offer higher category spending bonuses at locations that sell gift cards.

Below are three of my favorites.

1. The Chase Ink Business Cash Credit Card

apple and google gift cards
Credit: Twenty20

The Chase Ink Business Cash Credit Card Offers 5% Cash Back at Office Supply Stores 

Perhaps the most valuable card you can use to earn extra cash back or points on gift card purchases is the Chase Ink Business Cash credit card. (If you have the older Ink Business Plus Card—now closed to new applications—this card features the same category bonus.)

The Ink Business Cash Credit Card gives you 5% cash back on purchases made from office supply stores (up to $25,000 per year). So, if you purchase a $100 Lowes gift card from an office supply store like Staples using this credit card, you earn an extra $5 cash back for yourself.

Ramp Up the Earnings

While a 5% rewards return is already impressive, boost your earning power even more if you have the Chase Sapphire Preferred or Chase Sapphire Reserve card. When you earn cash back rewards on your Ink Business Cash card, they’re calculated as points. (One dollar cash back equals 100 points.)

You can then redeem points for cash back or transfer them to a Chase Ultimate Rewards card. By moving cash back rewards to your Sapphire Reserve, you can redeem them for 50% more value (for travel purchased through the Chase Ultimate Rewards portal) or transfer them to Chase’s wide selection of airline and hotel partners.

2. The Amex EveryDay Preferred Credit Card

gift cards hang on a store display
Credit: Twenty20

The Amex Everyday Preferred Credit Card Offers 3x Points at U.S. Grocery Stores (Up to $6,000 Annually)

Another place to easily find gift cards for a number of retailers is at your local grocery store. If you have a credit card like Amex EveryDay Preferred Credit Card, which earns higher rewards on grocery purchases, using the card at grocery stores could be a smart choice for holiday gift card purchases.

It’s worth noting that some card issuers have instituted policies banning gift card purchases from earning rewards. (This is largely due to abuse of the system.)

Ramp Up the Earnings

When you use your Amex EveryDay Preferred card at least 30 times in a month, you’ll qualify for 50% more Membership Reward points. So, instead of a gift card purchase at a grocery store earning you 3x points, it could earn you 4.5x points. You can also transfer any American Express Membership Rewards points you earn to a partner hotel or airline and potentially get more value when you’re ready to redeem them.

3. Chase Freedom

gift cards
Credit: Twenty20

Chase Freedom Offers 5x Points in Rotating Categories Each Quarter (Up to $1,500)

The Chase Freedom card features rotating bonus categories each quarter where you can earn 5x cash back on up to $1,500 in purchases. In the past, those bonus categories have included grocery stores, drug stores and gas stations—locations where you can easily make a gift card purchase.

Through the end of 2019, Chase Freedom’s current category bonuses include:

  • Department Stores
  • Purchases Made Using PayPal or Chase Pay

These categories probably won’t help you much with holiday gift card purchases (unless you want to buy one from a department store for someone on your gift list). But the Chase Freedom is worth mentioning as a good potential option for the future since its rotating categories have routinely included locations where you can buy gift cards in the past.

Ramp Up the Earnings

Like the Ink Business Cash Card, you can transfer cash back points earned on your Chase Freedom card to a Chase Sapphire Preferred Card or Sapphire Reserve account. Once transferred, you can use the Chase Ultimate Rewards portal to redeem the points for more value—50% more with Sapphire Reserve or 25% more with Sapphire Preferred.

Often, however, you’ll get the best value when you transfer points to a Chase airline or hotel partner.

Before You Begin Getting Deals and Saving Money on Gift Cards

You should only use credit cards to earn rewards if you can commit to paying off your full statement balance every month. Otherwise, credit card rewards simply aren’t worth the trade off.

When you revolve an outstanding balance on your credit card from month to month, you’ll get hit with interest fees. Interest fees can reduce or wipe out the value of any credit card rewards you earn. Plus, a higher account balance on your credit report could raise your balance-to-limit ratio (aka revolving utilization). This triggers a drop in your credit score.

But if you use your credit cards the right way and pay them off in full (and on time) every month, credit card rewards can be extremely valuable. You can redeem credit card points for my favorite type of reward—free travel—or use them for something else that appeals to you.

Compare Rewards Credit Cards

Still undecided on the best credit card? We get it. Choosing a credit card that meets your needs is important, which is why Slickdeals’ Credit Card Hub helps you compare the benefits of different cards, search credit cards by rewards categories, and explore cards by their issuers — all to find the best fit for your wallet.

NEXT: I Took My Dad to Israel in Business Class for Less Than $100 Using Credit Card Points

We want to make sure you get the best deal! Our editors strive to ensure that the information in this article is accurate as of the date published, but please keep in mind that offers can change. We encourage you to verify all terms and conditions of any financial product before you apply. Also, please remember this content wasn’t provided, reviewed or endorsed by any company mentioned in this article.

Michelle Black

Michelle Black is founder of CreditWriter.com and HerCreditMatters.com. Michelle is a leading credit card journalist with over a decade and a half of experience in the financial industry. She’s an expert on credit reporting, credit scoring, identity theft, budgeting, small business, and debt eradication. Michelle is also a certified credit expert witness and personal finance writer.

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