Why airline 'mileage millionaires' love gift cards

Summer Hull
Personal Finance Writer
Summer Hull writes the weekly "Get to the Points" column for CreditCards.com

Get to the Points

What do airline miles have to do with gift cards? Well, nothing and everything, depending on whom you ask. Believe it or not, there are some airline “mileage millionaires” who have earned basically all their miles purchasing various types of gift cards, and then there are others who also have millions of miles and points who have never purchased a single gift card.

Some frequent-flyer-mile fanatics run through more retailer, Visa and Mastercard gift cards than you can imagine using techniques that are totally legal, but probably still eyebrow-raising.

Then there are others, like me, who simply pick up a couple of retailer gift cards a month in order to boost our mileage earning totals. I’m not going to take you too far down the frequent-flyer gift card rabbit hole, but even conservative mileage earners can benefit from understanding how purchasing gift cards to Amazon, Whole Foods, Starbucks, Jason’s Deli and more can increase the number of miles you can earn each month.

It’s all about category bonuses
Many rewards credit cards have category bonuses, which means that at certain types of stores you will earn more points for your charges. These may be fixed bonus categories, such as on the Chase Sapphire Preferred or Amex Everyday, or they can be quarterly rotating bonus categories such as those on the Chase Freedom.

For example, if a rewards card pays out 1x points per dollar at most stores, but 5x points per dollar at office supply stores, it can make sense to focus your office supply purchases with that card. As you probably know, many larger office supply stores not only sell printers and desk chairs, but also gift cards to tons of retailers ranging from Starbucks to Disney.

If you normally spend $50 per month at Starbucks and pick up a $50 Starbucks gift card at an office supply store with a rewards card such as the Ink Plus business card (no longer available to new cardholders) that earns 5x points per dollar at office supply stores, then that is an easy 250 points earned on an expense you were going to have anyway. Websites such as Staples.com make that process even easier by having gift cards available for sale online.

By itself, 250 points for a $50 gift card isn’t overly impressive, but if you do that throughout the year it can add up over time to a free reward flight.

Stacking up the points
A popular place to earn a category bonus on many rewards credit cards is grocery stores, and that is also a place that often sells a variety of gift cards. Not only that, but some grocery store chains award their own proprietary points for gift card purchases as an extra incentive. As an example, at the Kroger family of stores you can earn 2x – 4x Fuel Points for gift card purchases made in the store.

When Kroger is running a 4x Fuel Points promotion on gift card purchases, I have stocked up on gift cards to places we regularly shop and dine, such as Jason’s Deli, Macy’s, Nordstrom, Panera, Outback and more to earn not only in-store Fuel Points that will save us up to $1 per gallon of gas, but also as many as 5x points per dollar for a “grocery” purchase on one of my rewards cards.

While you can do this and just use the gift cards for your own purchases as needed, it also can make a ton of sense if you need to give a gift card as a present to a teacher, friend or family member. You then have an easy-to-give gift for them and some bonus points for yourself!

Paying a fee to buy a gift card and earn miles
While there isn’t usually an extra fee to purchase a retailer-specific gift card to places such as Old Navy and Panera, there is typically a fee when you purchase a Visa, Mastercard or American Express branded gift card. As a result, you’ll have to do a little math before purchasing one of those gift cards if your goal is to earn airline miles or credit card points.

Case in point: If you wanted to purchase a $300 Visa gift card somewhere that awards 5x points on your rewards credit card, that would result in earning about 1,500 points. However, that card would also come with an additional fee that could be as high as $8.95. This means you would need to value the 1,500 points you are earning from the purchase at more than $8.95 for it to be worth it, while also factoring in the extra hassle of keeping up with and using a gift card for your purchases.

Strategically buying gift cards to ramp up your miles and points can absolutely be worth it, but you must do the math and know your limits for dealing with the extra hassle. Even if you are like I am and don’t set out to become a mileage millionaire with gift card purchases, you can still earn several thousand extra miles and points each year by making a few strategic gift card purchases by leveraging category bonuses on your rewards credit cards. 

See related: Gift card regulations: Fees, expiration limited by US law, Strategies for spouses doubling up on rewards cards


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Updated: 11-22-2017