Why Some Mileage Junkies Like Gift Cards

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If you read an assortment of miles and points blogs, and you at least occasionally should, you will see the topic of gift cards come up with some regularity.  Since most of us like to use rewards earning credit cards so that we can earn miles and points for our purchases why do people keep talking about using gift cards?  Seems kind of counter-intuitive, right?

Many of you already know the answer to this, but since gift cards have bubbled back up as a popular topic in the miles and points world with some new earning options emerging and old options disappearing, I thought I would offer a more “back to basics” explanation today.

Why Some Mileage Junkies Like Gift Cards

Gift cards are popular for miles fanatics primarily when they are sold at stores that code as a bonus category on various rewards credit cards (or perhaps at stores that accept Apple Pay for those in on this deal).  As a points example, let’s hypothetically say that a credit card pays out 4x points at grocery stores and a grocery store sells Visa gift cards. You could then buy a $500 gift card and earn 2,000 points on your credit card for doing so.

It is the purchase of the gift card that earns the points, not the using of the gift card.  This means buying them with cash or similar doesn’t do anything for you in this context.  In terms of using them, let’s say you have a $500 medical bill to pay – normally that would earn 1x on lots of credit cards for a total of 500 points.  However, by paying that bill with a $500 Visa gift card that you purchased at the grocery store as indicated above, you would effectively earn 2,000 points for that purchase/bill payment by adding in a little strategy.

When I buy gift cards I use them to just pay bills/make purchases as normal wherever Visa cards are accepted (when I don’t need credit card purchase protection) as shown in the previous medical bill example.  However, some like to “liquidate” them via more advanced methods that aren’t something I currently dabble in or write about.  If you are interested in that sort of thing, there are lots of sites and forums that can help you out, with a popular starting point being “The Frequent Miler”.

I like to earn miles and points without adding complexity to my life, so I don’t typically buy more gift cards that I can easily use in everyday life.  That’s a decision you need to make for yourself, but even if you decide to go “all in” on gift cards, I still would not recommending starting off small.  Start off by having a full understanding of where gift cards are sold and which rewards credit cards make the most sense when purchasing.

The Costs of Dealing With Gift Cards

One “catch” to all of this is that Visa or MasterCard gift cards typically come at a price that can often vary from $3.95 – $8.95 additional per gift card.  This means you aren’t earning points “for free”, but instead are paying a (low) price for them.  To determine how much you are paying for your points just take the extra out-of-pocket costs for your gift cards and divide by the number of points that you earned.  If your $500 gift card cost you $505.95 and earned you 2,000 points with the purchase then divide $5.95 by 2000 and you have a cost of close to 3/10 of a cent per point.  If you incur any additional costs in the process then be sure to include those too if you want an accurate picture of what this is costing you.

In order to know if this is a good deal for you, you also have to know what type of value you usually get out of your points, as well as remember to factor in your time invested.  This means this is not something for “beginners” in the miles and points arena.

New Options for Buying Gift Cards

All that said there are two developments in the gift card world that are worth a mention for as long as they last (which may not be long considering how “big” some folks go with this sort of thing).  First, as I stated here Staples.com now carries $300 Visa gift cards at a price of $308.95 each.  The largest gift card they previously carried was $200.  What I love about this method is that you don’t have to go to any store and check for the gift cards – you can just order them online and they get delivered to your house.  However, my favorite gift cards via Staples.com are currently grocery gift cards and similar since they come with no additional fee and can be delivered via email.

This weekend’s new buzz is that some Office Max stores are carrying variable load $500 Visa and MasterCard gift cards that are being sold to those paying with credit cards.  The Office Depot near me has had variable load gift cards for years that they will no longer being sell to those paying with credit cards, so it won’t shock me if this situation with the new $500 gift cards at Office Max (same owners as Office Depot) changes again at some point.  Still, this development is worth noting since office supply stores pay out 5x points on a few rewards earning credit cards.

I hope to check out a nearby Office Max in the near future to see the current gift card situation for myself, but even if it is a positive situation I won’t expect it to last forever, because nothing like this ever does…



Editorial Note: The opinions expressed here are mine and not provided, reviewed, by any bank, card issuer, or other company unless otherwise stated.

Disclaimer: The comments below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


  1. Happy Sunday! For a good idea how the general flying public views families flying with young children, today’s Sunday comic strip “Baby Blues” by Rick Kirkman & Jerry Scott does a great job of that. A picture is truly worth a thousand words. I’m very surprised other readers of your blog haven’t mentioned or commented on this comic strip yet.

  2. “However, some like to “liquidate” them via more advanced methods that aren’t something I currently dabble in or write about.”

    But you spend the rest of the post writing about exactly that…

    • Nick-

      Liquidate means to dispose of. Please quote the “rest of the post” where you think liquidation was described.

      Perhaps you were just mistaken.

  3. I would quibble just a bit in the calculation of the costs, because you have to consider the opportunity cost if you are spending the gift card (and not getting miles at that stage) where you would normally get 1x, such as your doctor’s office.

    If you get the hypothetical 4x by buying the gift $500 gift card, you get the 4x on that transaction, but you lose back 1x when you use the gift card. I consider the gift card transaction to be a 3x purchase for a cost of $5.95 (in your example), so the cost per point is actually just a little below 0.4 cents per point, rather than 0.3. Of course those who have creative ways to liquidate the card instead of spending it on normal transactions would need to calculate instead any costs of doing that, rather than the flat 1x in your example.

    That’s still a good deal in many cases, but I sure wish I could find $500 gift cards I can buy with a credit card for $5.95 where I live. No luck for several years on that one. If you have to pay $6.95 for a $200 card, that’s still an OK deal for something like UR points at an office supply store, but not nearly as spectacular and getting to the point where I wouldn’t go very far out of my way for it.

    Of course if you end up spending the gift card where you could get a category bonus of any kind, the value drops even more.

    • Agree, there are different approaches to calculating overall costs and returns, but the most important thing is to just be sure you are still coming out on top factoring all of that in.

  4. Until last week there was Redcard. Was able to do 5,000 a month manufacture spend by buying one vanilla visa debit gift cards and loading them to Redcard. I opened up 9 credit cards with minimum spend of $8,500 combined. Would have never been possible if not for a way to “liquidate” these gift cards.

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