Discover 5% @ grocery stores - Is buying gift cards allowed?

[Anonymous]

I am still in my 1st year of having the IT card so I am getting cashback match until sometime in september. I havent been using my disco card nearly as much lately and just noticed this quarter is grocery stores through the end of this month. 

My question is, can I go buy $1500 worth of giftcards (gas cards, restuarants that we go to often, stores that we shop at often) that have no surcharge at a grocery store and have that count as normal grocery store spend? 

Since I am still in the cashback match intro I would essentially be getting 10% off. That would be pretty cool to get $150 off of $1500 that I will no doubt end up spending over the next few months. 

Also if this is allowed does anyone have any experience doing this? Should i maybe break it up into a few trips? Will trying to buy $1500 of giftcards at a grocery store with a credit card raise red flags with either disco or the store itself causing either one to block the purchase? 

[Anonymous]

I'm curious about this as well. With Grocery stores being the 5% catergory for both Discover and Chase, I'm wondering if I can maximize both cards before the end of the month.

[DaveInAZ]

Yes it's allowed, but $1500 is a lot - definitely break it up into several purchases, and even better if your can break it up over different billing cycles, altho yeah the 5% groceries end June 30.

Make sure they don't have any surcharges or activation fees. I was tempted last week on my Safeway grocery website I had an offer for $10 off on a $150 Mastercard gift card. I looked at it in the store and when I saw there was a $4.95 activation fee I put it right back on the rack, not worth the hassle and I think a $5 "activation fee" is a ripoff. I've received gift/pre-paid cards before and they're a pain to use for the full value down to the last cent. Restaurants aren't too bad as you can tell the server to put $xx on the gift/pre-paid card and the rest on a credit card. But at gas stations you need to go inside and have the clerk put an exact amount on the pump from the card. Never use a gift/pre-paid card at the pump as they place a hold for $75-100 on a card. For all the hassle I don't do gift cards.

[Anonymous]

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@DaveInAZ wrote:

Yes it's allowed, but $1500 is a lot - definitely break it up into several purchases, and even better if your can break it up over different billing cycles, altho yeah the 5% groceries end June 30.

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Yes, unless you often spend a lot at the grocery store so that an extra $1,500 doesn't look very different, I would break it into a few purchases (I wouldn't worry about the billing cycles).     Providing you are buying retail cards rather than cash equivalents, you aren't doing anything against the terms and conditions, but you don't want to raise questions with fraud alerts etc.

In my first year with Discover IT Miles I did this frequently (well, I was buying cash equivalents but I'm a bad person) and it wasn't an issue.

[Anonymous]

yes, I would have no issue buying gift cards to max out the 5% back....the $500 variable ones are my favorite ones to max these categories out yeah you pay $6 per card to do this but that's nothing compared to $75-$150 bonus... an additional $500 per month which adds up to $1500 over the quarter wouldn't bring up any flags if you don't buy that much in groceries... or home depot cards when I have repairs coming up. 

[Anonymous]

I have been mistaken. I was always told that purchasing gift cards with a credit card count as a cash advance.

[Brian_Earl_Spilner]

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@Anonymous wrote:
I have been mistaken. I was always told that purchasing gift cards with a credit card count as a cash advance.

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I believe it depends on how they ring it up. There's a grocery store by me that has a separate desk for gift cards. They also don't accept credit cards to purchase gift cards.

[BronzeTrader]

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@DaveInAZ wrote:

Yes it's allowed, but $1500 is a lot - definitely break it up into several purchases, and even better if your can break it up over different billing cycles, altho yeah the 5% groceries end June 30.

Make sure they don't have any surcharges or activation fees. I was tempted last week on my Safeway grocery website I had an offer for $10 off on a $150 Mastercard gift card. I looked at it in the store and when I saw there was a $4.95 activation fee I put it right back on the rack, not worth the hassle and I think a $5 "activation fee" is a ripoff. I've received gift/pre-paid cards before and they're a pain to use for the full value down to the last cent. Restaurants aren't too bad as you can tell the server to put $xx on the gift/pre-paid card and the rest on a credit card. But at gas stations you need to go inside and have the clerk put an exact amount on the pump from the card. Never use a gift/pre-paid card at the pump as they place a hold for $75-100 on a card. For all the hassle I don't do gift cards.

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All Visa and MasterCard GCs have activation fees from $5 to $6 per card.  Typical merchant GCs cards, such as Amazon, Nike and Red Lobster, have no fees.

So it is best to buy the max, like $500 GC, not the $25, with the fee.  

For the new card, you may get fraud alert.  Just call back and they will remove it.  There is always some risk with buying GC.  But people still have to pay with the CC to buy those GCs....

[arkane]

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@DaveInAZ wrote:

Yes it's allowed, but $1500 is a lot - definitely break it up into several purchases, and even better if your can break it up over different billing cycles, altho yeah the 5% groceries end June 30.

Make sure they don't have any surcharges or activation fees. I was tempted last week on my Safeway grocery website I had an offer for $10 off on a $150 Mastercard gift card. I looked at it in the store and when I saw there was a $4.95 activation fee I put it right back on the rack, not worth the hassle and I think a $5 "activation fee" is a ripoff. I've received gift/pre-paid cards before and they're a pain to use for the full value down to the last cent. Restaurants aren't too bad as you can tell the server to put $xx on the gift/pre-paid card and the rest on a credit card. But at gas stations you need to go inside and have the clerk put an exact amount on the pump from the card. Never use a gift/pre-paid card at the pump as they place a hold for $75-100 on a card. For all the hassle I don't do gift cards.

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As mentioned, the trick is to buy variable load GCs that allow you to fund up to $500. This way a $5-6 activation fee amounts to about 1%, so very doable. Or at the very least, make sure you buy at least the $200 denomination so it's "only" 3% activation fee.

And to answer OP's question: yes, you can buy closed-loop GCs (retailer specific, no activation fees) and open-loop GCs and they'll all count towards the $1500 grocery cap. I've bought $100 in gas cards, a $50 store card, and the rest in variable load Visa giftcards. I blew through the cap in 2 months, with almost $1000 spent in "groceries" in May and Disco didn't care.

The tricky part for me was actually finding grocery stores that allowed me to use my CC to fund the GC and not insist on a cash/debit only policy. Eventually I learned that this is a very location specific thing, as the Safeway closest to me bans all CC funding, while the one just 5 miles away from me had no problem with it after verifying my ID to make sure I was the actual cardholder.

[sdsoccerdad]

I was able to get 3-$500 gift cards in 3 different trips.  Amazon, Nordstrom were the ones I bought.