You just received a gift card for a birthday or holiday—but it’s for a store you never shop at. A logical thought pops into your head: “I’ll just go to a store like Target or a grocery store and use this gift card to buy one I’ll actually use, like for Amazon or Starbucks.”

While this seems like a simple and smart exchange, you’ll likely find your transaction blocked at the register. The answer to whether you can buy a gift card with another gift card is almost always no, and this article will explain the important reasons why and cover the rare exceptions.

The Short Answer: Generally, No—And Here’s Why

For the vast majority of situations, retailers will not allow you to purchase a gift card using another gift card as your payment method. This isn’t an arbitrary rule to make your life difficult; it’s a firm policy rooted in security and federal regulations designed to protect consumers and businesses alike.

Why is This Transaction Often Blocked? Understanding the Reasons

Retailers block these transactions for two primary reasons:

1. Fraud Prevention: This is the biggest factor. Scammers often use stolen credit cards to purchase store gift cards in bulk. They then attempt to “clean” the money by using those gift cards to buy different, more versatile gift cards (like a Visa or Amazon gift card). By blocking gift-card-for-gift-card purchases, retailers break this chain of fraud and make the stolen funds harder to use.
2. Anti-Money Laundering (AML) Regulations: U.S. federal laws, including the Patriot Act, require businesses to take steps to prevent financial crimes. Gift cards can be used as an untraceable way to move money. Limiting the ability to convert one gift card into another helps retailers comply with these regulations and prevent their stores from being used for money laundering.

Breaking It Down: Different Scenarios, Different Rules

The answer can change slightly depending on the type of gift card you have and the type you want to buy. Here are the three most common scenarios.

Scenario 1: Using a Store Gift Card to Buy Another Gift Card

(Example: Using a Target gift card to buy a Starbucks gift card at the Target checkout.)

Likely Outcome: No. This is almost universally prohibited by store policy. A retailer’s gift card (known as a “closed-loop” card) is intended for purchasing merchandise and services from that specific brand. Their payment systems are programmed to reject the use of their own gift cards for the purchase of a third-party gift card.

Scenario 2: Using a Bank-Issued Gift Card (Visa/Mastercard) to Buy a Store Gift card

(Example: Using a $50 Visa gift card to buy a $50 Starbucks gift card.)

Likely Outcome: Maybe. This is the most likely scenario to be successful. A bank-issued, open-loop gift card (like a Visa, Mastercard, or American Express gift card) is treated by payment systems like a debit card. In many stores, this transaction will go through without any issues. However, some retailers have configured their systems to block this as well, so success is not guaranteed.

Scenario 3: Using a Bank-Issued Gift Card to Buy Another Bank-Issued Gift Card

(Example: Using a Visa gift card to buy another Visa gift card.)

Likely Outcome: No. This transaction is almost always blocked. It is a major red flag for money laundering activity, as it can be used to “layer” funds, making them harder to trace. Retailers and banks forbid this to comply with financial regulations.

Quick Reference Chart: A Visual Guide to the Rules

Type of Card You HAVE	Type of Card You WANT TO BUY	Likely Outcome
Store Gift Card (e.g., Target, Best Buy)	Another Store Gift Card (e.g., Starbucks, Lowe’s)	Almost Never (Blocked by store policy)
Visa/Mastercard Gift Card	Store Gift Card (e.g., Starbucks, Lowe’s)	Sometimes (Depends on the individual retailer’s system)
Visa/Mastercard Gift Card	Another Visa/Mastercard Gift Card	Almost Never (Blocked due to fraud/AML risk)

Export to Sheets

What to Do if Your Transaction is Denied: Smart Alternatives

So, you’re at the register and the transaction was rejected. What now? Here are a few practical workarounds.

• [✓] Use the Card for Everyday Purchases: The easiest solution is to use the unwanted gift card for things you were going to buy anyway, like groceries, gas, or household supplies. Then, use the cash you freed up from your budget to buy the gift card you actually wanted.
• [✓] The Online “Wallet” Method: This is a great trick for bank-issued gift cards. Many online services allow you to add the Visa or Mastercard gift card to your account as a payment method. For example, you can add it to your Amazon account or your Starbucks app and load the balance into your account. Then, you can use your new account balance to purchase an e-gift card from that same brand.
• [✓] Use a Gift Card Exchange Service: Websites like CardCash allow you to sell unwanted gift cards for cash, though you will receive less than the card’s face value. Be sure to use a reputable service, as this space can have untrustworthy players.

The Online vs. In-Store Question

The rules are generally the same whether you are shopping in a physical store or online. E-commerce websites have sophisticated fraud detection systems that will typically block an attempt to buy a new gift card using another gift card in your cart at checkout.

Frequently Asked Questions (FAQ)

Q: Why are retailers so strict about this? A: It’s all about risk. The financial penalties for non-compliance with anti-money laundering laws and the losses from fraud are significant, so retailers take a very cautious approach.

Q: What if my Visa gift card doesn’t cover the activation fee for another gift card? A: This is another reason transactions fail. If you try to buy a $25 store gift card with a $25 Visa gift card, it will work. But if you try to buy a $25 Visa gift card that has a $3.95 activation fee, your total is $28.95, and the transaction will be declined because the gift card has insufficient funds.

Q: Can I use a store credit or merchandise return card to buy a gift card? A: Almost universally, no. Store credit is treated just like a store gift card and is meant for merchandise only.

The Bottom Line: Always Have a Backup Payment Method

Key Takeaways

• Store-for-Store is a No-Go: You generally cannot use a retailer’s gift card (like Target’s) to buy another brand’s gift card in their store.
• Visa/Mastercard Might Work: Using a bank-issued gift card to buy a store gift card is your best bet, but it still depends on the retailer.
• It’s About Preventing Crime: These rules are in place to combat fraud and money laundering.
• Use It, Don’t Trade It: The easiest workaround is to simply use the unwanted gift card for your regular shopping and buy the new gift card with cash or a debit/credit card.

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Conclusion

While it’s tempting to think of gift cards as cash, the reality is that they come with rules designed to protect both businesses and consumers. The system is intentionally built to prevent gift cards from being easily converted into other gift cards. To avoid any hassle at the checkout counter, your best bet is to always plan on using a standard payment method—like a credit card, debit card, or cash—for your gift card purchases.