Gift cards are characterized in the retail industry as “closed loop” or “open loop.” The distinction is important because buying a closed-loop gift card with a credit card is generally easier than buying the open variety—at least in my experience. Closed loop means the gift card can be used only at the store or brand issuing them. Open loop cards, typically from major credit card companies or financial institutions, can be used virtually anywhere, online or in store—but you’ll usually incur purchase fees that range from $2.95 to $6.95, depending on the value of the gift card.
Both closed and open loop gift cards generally can be purchased with a credit card, but retailers make it easier to buy their own closed loop cards. In my explorations for this article, retailers usually made their own store brand gift card available for online purchase, but I often had to go into one of that retailer’s real-world stores to buy other gift cards—with one major exception, described below. So, it can make a lot of sense to think through where your intended recipient shops, and the brands they like or dislike. That might help you zero in on a closed loop gift card you can easily buy with your credit card.
Beyond that, though, in-store and online merchant policies on gift card purchases vary widely, and the terms and conditions can be tough to find. I experienced this first-hand when trying to find gift card buying information at four nationwide brands: an electronics retailer, two drugstores and a household-name discount department store. On one end of the spectrum, it felt like I could buy online any gift card I could imagine with my credit card. On the other end, only that brand’s gift cards were even mentioned.