Can You Buy a Gift Card With a Gift Card?

Gift cards have become important in the world of gifting, offering a convenient and good way to celebrate special occasions or express gratitude. But what happens when you receive a gift card and wonder if it can be used to purchase another gift card? This question arises more often than you might think, especially during the holiday season or in situations where regifting or transferring value seems like a good idea.

Understanding Gift Cards

It’s important to understand how gift cards function. Gift cards fall into two main categories:

1. Closed Loop Gift Cards: These are specific to a particular retailer or brand. For instance, a Starbucks gift card can only be used at Starbucks locations.
2. Open Loop Gift Cards: These are typically branded by major payment networks like Visa, Mastercard, or American Express. They can be used anywhere the payment network is accepted.

Both types of gift cards have terms and conditions that dictate how they can be used, including whether they can be used to purchase other gift cards.

Policies Around Buying Gift Cards With Gift Cards

When considering whether you can buy a gift card using another gift card, the answer largely depends on the retailer’s policy. Let’s break it down:

1. Retailer Specific Gift Cards

Many retailers have strict policies prohibiting the use of their gift cards to purchase other gift cards. This is often due to concerns about fraud, money laundering, or abuse of promotional offers.

For example:

These policies are typically outlined in the terms and conditions associated with the gift card, though they may not always be prominently displayed.

2. Open Loop Gift Cards

Open loop gift cards, such as those issued by Visa or Mastercard, function more like prepaid debit cards. As such, they can often be used to purchase other gift cards, provided the transaction is processed like any other retail purchase. However, additional fees or limitations may apply, depending on the merchant.

3. Third Party Marketplaces

Third party platforms like Amazon, eBay, or specialized gift card marketplaces may have varying rules. For instance, Amazon allows the use of its gift cards for most purchases, but not for buying other Amazon gift cards.

Why These Policies Exist

The restrictions on using gift cards to purchase other gift cards are not arbitrary. They exist to address several concerns:

1. Fraud Prevention: Allowing gift cards to be used interchangeably can create opportunities for fraudulent activities, such as converting stolen gift cards into new ones to launder money.
2. Promotion Abuse: Retailers often run promotions or discounts on gift card purchases. If customers could use gift cards to buy more gift cards, they might exploit these offers indefinitely.
3. Accounting Challenges: Gift cards are considered liabilities on a retailer’s balance sheet until they are redeemed. Permitting the purchase of gift cards with gift cards complicates accounting processes.

Workarounds and Alternatives

While direct gift card to gift card transactions are often restricted, there are creative ways to achieve similar outcomes:

1. Split Payments: Some retailers allow split payments, where you can use a gift card alongside another payment method, such as cash or a credit card. This approach lets you reduce the balance on a gift card and still purchase a new one.
2. Buy Merchandise, Then Return: A less direct method involves purchasing merchandise with your gift card and returning it for a refund. Some retailers issue refunds in the form of a new gift card, effectively transferring the balance. However, this method may violate store policies and is not guaranteed to work.
3. Gift Card Exchanges: Online platforms like Raise or CardCash enable users to sell unwanted gift cards and purchase others at a discount. While this doesn’t allow for a direct transfer, it provides a way to convert one gift card into another.
4. Use Open Loop Cards Strategically: If you have a Visa or Mastercard gift card, use it at a retailer that allows the purchase of other gift cards. Be mindful of potential fees and ensure the transaction is permissible under the terms of the gift card.

Points to Consider

If you’re thinking about using a gift card to buy another, keep these considerations in mind:

1. Read the Terms and Conditions: Always review the fine print on your gift card to understand its limitations and permitted uses.
2. Check With the Retailer: Policies can vary widely, even among different locations of the same retailer. It’s a good idea to ask customer service for clarification.
3. Beware of Scams: Be cautious when dealing with third party marketplaces or exchanges. Stick to reputable platforms to avoid fraud.
4. Fees and Expiration Dates: Open loop gift cards often come with activation fees and may have expiration dates for funds. Be aware of these when planning your purchases.

So, can you buy a gift card with a gift card? The answer is a qualified sometimes. While many retailers prohibit such transactions, open-loop gift cards and certain creative strategies can provide a way around these restrictions. The key is to understand the rules governing your specific gift card and to explore alternative options when direct transactions aren’t possible. Gift cards are designed to make gifting simple, but their use can occasionally involve navigating complex policies. By staying informed, you can make the most of your gift cards and ensure they serve your needs effectively.