If you frequently visit our site, you may enjoy maximizing savings and extracting the most value from your purchases. Using a rewards credit card is an excellent method to enhance the benefits of your spending, provided you pay off the balance each month. However, there’s a savvy technique to boost your savings on both online and in-store purchases: using gift cards.

When shopping at major retailers or online stores, consider purchasing their gift cards from office supply shops, supermarkets, gas stations, or online vendors. This strategy can help you earn top-tier credit card rewards and potentially save a few percentage points on future buys. Here’s how it works:

1. Identify Credit Cards Offering Bonuses for Gift Card Purchases

Some credit cards provide bonuses for dining, but achieving maximum rewards while eating out or shopping depends on your card selection. Other cards offer bonuses at office supply stores, supermarkets, and various locations where gift cards are sold—this is where the advanced tactic begins.

For instance, if a card provides 4% cash back on dining and entertainment, 2% at grocery stores, and 1% on all other purchases, you might initially see it as a way to earn 1% back on non-bonus categories. However, you can optimize this with gift cards:

• When subscribing to Netflix, purchasing movies on iTunes, or buying supplies from Home Depot or Lowe’s, you typically earn the 1% back from “everywhere else” purchases.

• By buying a Netflix, Apple, or home improvement store gift card at your local grocery store, you can secure the 2% cash back rate (check your card’s terms to be sure). This approach doubles the reward compared to direct shopping.

• For small business owners, using the Ink Business Cash® Credit Card at Office Depot, Office Max, or Staples can yield 5% cash back on gift cards. This translates to five times the rewards for purchases you would make regardless.

2. Understand Credit Card Restrictions and Terms

Certain credit cards prohibit earning points through the purchase of gift cards, with American Express being particularly strict about this. Exercise caution based on the card you use.

However, incorporating a few gift cards into your regular grocery shopping is unlikely to attract attention from Amex or other credit card issuers. Nonetheless, be aware that accounts can be canceled or rewards retracted if the rewards system is misused. Review the detailed terms in your cardholder agreement to know what actions are restricted.

Be especially careful if you plan to buy Visa, MasterCard, or American Express gift cards using a credit card. Such transactions may be categorized as cash advances, incurring higher fees and no rewards, potentially causing issues with your credit card provider.

3. Plan Carefully and Avoid Overspending

If your credit card provider permits gift card purchases and you use this strategy judiciously, you can significantly boost your rewards. Moreover, you might save more by purchasing discounted gift cards. For instance, eBay frequently offers gift cards for various companies at reduced prices. Recently, I bought Southwest Airlines and Lowe’s gift cards with a 10% discount, effectively saving 10% on future purchases.

While special financial events like credit card promotions, Black Friday, Cyber Monday, and Prime Day provide periodic deals, there are opportunities to save year-round if you stay vigilant.

4. Develop a System to Optimize Rewards and Monitor Gift Cards

It’s crucial to avoid mistakes when aiming to earn more rewards through gift cards. Missing a credit card payment or not paying the full balance can result in interest charges and fees that negate your savings. Additionally, losing a gift card is akin to losing money.

I utilize a Google Sheets spreadsheet and Google Wallet to store and track all my gift cards. With automatic payments and effective reminders, I have never incurred credit card interest or late fees.

Create a system that suits you to stay organized. By doing so, you can consistently maximize your credit card rewards.

5. Choose the Best Rewards Credit Cards for Gift Card Purchases

Using a rewards credit card for gift card purchases can help you earn valuable points, miles, or cash-back benefits, especially during the holiday season.

However, not all rewards credit cards offer the same benefits. Some cards may provide higher rewards for dining or travel, while others may offer more for groceries or gas. To maximize your rewards, it’s essential to select the right credit card for each type of purchase.