Costco Gift Cards counting as Cash Advance with Disco????

[Legal_Girl]

Matt4200..... I, like most card users, have notifications set for transactions.  I get an email and a text anytime there is a charge of $100 or more placed on my card.  The wording you quoted is the exact wording in the alerts I get from Discover.  I used my card for $641.00 at the dentist a couple of weeks ago and the text alert read "Your Discover card purchase or cash advance exceeds the amount you have set".  If you don't recall setting your notifications for $100, then go to Discover website or their app and check and or change your notification alert settings.

[longtimelurker]

---

@Anonymous wrote:

The determination has to do with the way the purchase is processed by the merchant, and also by the way the issuer interprets it.

Language regarding the definition of "cash advance" is (perhaps purposely) ambiguous in most cardholder agreements.

Discover uses:

“Cash Advance” means the use of your Account to:

•  obtain cash from participating automated teller machines, financial institutions or other locations;

• purchase lottery tickets, money orders, casino chips, foreign currency or similar items.

Notice "similar items" can be open to varied interpretation.

Amex uses:

A purchase is a charge for goods or services. A cash advance is a charge to get cash or cash equivalents.

"cash equivalents" is perhaps less precise than Discover's list of examples, but really this one seems more clear in a way - if it isn't a "charge for goods or services" then it could be a "cash advance."

Chase uses:

The following transactions will be treated as cash advances: purchasing travelers checks, foreign currency, money orders, wire transfers or similar cash-like transactions; purchasing lottery tickets, casino gaming chips, race track wagers or similar betting transactions; and making a payment using a third party service.

Again, "similar cash-like transactions" is imprecise, so you get the idea...

Gift Cards are considered cash-equivalents.  They are purchased for a set amount of money, and carry that exact amount as their value until depleted.  They can be used by anyone who has possession of them (bearer instruments) regardless of who purchased them or how.  They have no relation to the user's financial, banking, personal, or credit infomation.

Many retailers do let you purchase these with a credit card, and the transaction posts like any other purchase, and everyone goes on about their business.

Unfortunately, though, in some cases a credit card lender will process it like a cash advance, and when they do there really isn't much that can be done - you might have success with interest/fee forgiveness, depending on the relationship you have with the lender, but gift cards are for all intents and purposes "cash equivalents" and so under their agreements we all agree that they can treat those as cash advances, even if it isn't done consistently.

---

I haven't heard many cases where a retail gift card was considered a cash-equivalent.    The real concern from an issuer is ease of repeatability.   If I buy a Visa gift card and get a reward, I can fairly easily liquidate it for cash, pay off the card and do it again as many times as I can.   With a retail card, it's much less easy to do this.  (Yes, I could sell to an online gift card mall, but I could also buy say a TV and sell that.)

[txtjjs]

I got the same exact message for a non gift card purchase at home depot just last week. It says "purchase or cash advance," which I'm pretty sure means "you either made a purchase over your alert amount" (as most likely your case) OR "you made a cash advance over your alert amount (probably not your case).

[Subexistence]

That's a smart way to get around the visa problem

[Anonymous]

Amex won't let us our Amex card to buy tickets at the Dinner/acrade because they consider them to be gambling. But we can buy food at the dinner with Anex.