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Buy Discount Gift Cards With Reward Credit Cards And Save Money

Published 2/4/08 (Modified 1/7/14)
By MoneyBlueBook

One of the ways to maximize your money is by taking advantage of the higher cash back credit card rewards that many reward credit cards offer for purchases made at special bonus reward locations that include - supermarkets, drugstores, and gas stations. What some people might not realize is that many, if not most of these three brick and mortar locations also sell gift cards that can be used towards other major retailers - everything from places like Home Depot to Bed Bath & Beyond. By buying these retail gift cards at the bonus reward locations, cardholders have the potential to earn up to 5% or more cash back through credit card discounts and rebates through a process that's essentially a mild form of gift credit card arbitrage.

Purchase Gift Cards At Rebated Prices And Use Them At Places Like Department Stores, Restaurants, and Online Retail Websites

While there is a multitude of specialized reward credit cards out there (everything from airline credit cards to restaurant credit cards) offering all sorts of credit card offers and usage perks, the majority of these rebate cards reserve the highest cash back percentages for purchases made at what I'd like to call "the big three" - supermarkets, gas stations, and drug stores. Credit card terms do vary, but they usually offer much lower rebate rates (usually 1% back) for everyday purchases made at non "big-three" locations like department stores, clothing shops, restaurants, and online stores.

The trick to earning the maximum reward percentages even when you make purchases from the lower rebate percentage categories is to buy and stock up on these retail gift cards that can be purchased at supermarket display stands where cardholders can earn the much higher discounts.

Unlike the ripoff processing fees charged for the admittedly more versatile cash gift cards (most notably by American Express), retail gift cards usually have no activation or purchase fees other than your customary state sales tax. Thus, if you can purchase these retail cards at a supermarket or drug store and later use them at say, a department store or a restaurant, you have the potential to earn up to 5% cash back or more, depending on the specifics of your reward credit card's rebate usage terms.

To see what retail gift cards are out there, I checked out a few major supermarket stores like Safeway, Giant, and Shopper's Food Warehouse, as well as a few drugstores like CVS, Rite Aid, and Walgreens to examine the variety of gift cards that they sell. Although not as prevalent, even some gas stations are now getting in on the gift card selling action.

Some Of the More Popular Store Gift Cards Being Sold On Display Racks and Stands At Supermarkets, Drugstores, and Gas Stations Include:

  • Amazon, Barnes and Nobles, Bass Bro Shop, Bed Bath & Beyond, Best Buy, Blockbuster, Cheesecake Factory, Chili's, Circuit City, Cracker Barrel, eBay, Eddie Bauer, Gap, Home Depot, iTunes, Kohl's, Macaroni Grill, Macy's, Nordstrom, On The Border, Old Navy, Olive Garden, Outback Steakhouse, Panera Bread, PF Chang, Pottery Barn, Red Lobster, Regal Cinemas, REI, Sears, Starbucks, and Toys R Us.

There may be some I'm missing, but if you frequent any of these stores on a regular basis, you might want to consider using your trusty reward credit card to earn 5% cash back or more by snapping up one of the retail gift cards at your local supermarket or drug store for later anticipated use. You're not going to get rich off this, but it will help you maximize your money potential by earning cash back rewards for something you were going to put your money towards anyway.

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5 Responses to “Buy Discount Gift Cards With Reward Credit Cards And Save Money” 

  1. Michelle Robinson says:

    Great idea--I'll definitely keep this in mind, especially for holiday shopping!

  2. Dan says:

    One other interesting thing to note is that sometimes the grocery/drug stores have additional incentives of their own...

    Grocery chain Giant Eagle here in Cleveland actually gives you gas discounts at their gas station chain (Get-go) when you make purchases in the store using their "Giant Eagle Advantage Card." They actually encourage people to buy gift cards like the ones you mentioned and maximize their savings (like 30c/gallon) on gas. So with something like you described, you could earn 5% on the gift card purchase, AND get like 10-20% off your fuel purchase. Not bad.

  3. Raymond says:


    That's the spirit! Those purchase credit card deals that offer 5% or more for grocery store/supermarket gift cards for other retailers, paired with other store loyalty benefits can really help people maximize their money.

  4. Tim says:

    Some people are doing this now with their stimulus checks. Kroger has a 10% bonus offer now for gift cards of $300, $600 or $1200. I know one guy who used a 5% cash back card on groceries to charge a $1200 gift card which was loaded with $1320. In the end, after the $60 cash back he paid $1140 for a gift card loaded with $1320 for future grocery purchases.

    Pretty slick.

  5. Fantino Aquino says:

    Great Job!!
    I was wondering if you happen to know a company that offer this cards for a retail store I mange an employee store and I would like to offer this product in the store.
    If you know a company that offers a good selection I would love to contact them for business. I thank you very much for any information

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