As we have alluded to in our posts time and time again, the best way to accumulate points and miles for travel is through credit card welcome offers! However, these offers are often tied to minimum spending requirements – you must spend a certain amount of money within a limited time frame.
For some of these welcome offers, especially the ones offered on business credit cards, the amount that you need to spend in a short period can be quite daunting. If you’re frequently reading our site, odds are you are a pretty frugal human (pun definitely intended!) and don’t want to spend thousands of dollars in just a few months. This may dissuade you from signing up for a great welcome offer and gaining some valuable points and miles.
That’s where buying gift cards can come into play and an amazing strategy for us to meet minimum spending requirements. Let’s take a dive into how to best use gift cards to meet minimum spending requirements to help us earn valuable points and miles toward our next redemption!
Benefits of Purchasing Gift Cards as a Spending Method
If you are averse to manufactured spending, purchasing gift cards is your next best bet to easily meet minimum spending requirements (MSRs) to earn credit card welcome offers. Essentially, we are purchasing gift cards to stores that we would otherwise be shopping at anyway.
The easiest way to think about this is like a debit card – we use our credit cards to “deposit” money into this gift card for later use. This way, we can meet the spending requirements to unlock the credit card welcome offer, but only spend money that we would have used later on anyway.
Here’s an example: anyone who knows me knows that I am an AVID lululemon connoisseur. However, it would be irresponsible for me to go and spend $1,000 at lululemon just to inch closer to meeting a minimum spending requirement. Thus, because I know I’m bound to buy clothes there for myself or others at some point, I will buy some lululemon gift cards, hold onto them, and spend them at a later time.
If you are coming to the end of the time frame to meet the minimum spending requirements on a credit card welcome offer, buying gift cards will come in handy to “prepay” for your purchase!
The Best Place To Buy Gift Cards
Grocery stores are hands-down the best place to buy gift cards for our purposes. That is because many travel credit cards have increased point multipliers when they are used at grocery stores. Two of the strongest grocery store credit cards are the American Express Cobalt card and Scotiabank Gold American Express card, which will earn you 5x Membership Rewards and 5-6x Scene+ points, respectively.
The American Express Cobalt card earns Membership Rewards points and gives cardholders the opportunity to earn 5x Membership Rewards on eligible restaurant, food delivery, and grocery store purchases.
In 2024, we selected this card to receive the award Best Credit Card for Grocery Purchases.
Check out our American Express Cobalt card review for more details.
15,000 Membership Rewards
$9,000
$174+
$156
Yes
–
The Scotiabank Gold American Express card earns Scene+ Rewards points and gives cardholders the opportunity to earn 5x Scene+ points on grocery, restaurant, and entertainment purchases. This card charges no foreign exchange fees.
Check out our Scotiabank Gold American Express card review for more details.
45,000 Scene+
$7,500
$450+
$120 (FYF)
No
Oct 31, 2024
In fact, even after meeting the spending requirements for the American Express Cobalt and Scotiabank Gold American Express cards, it is a smart idea to keep buying gift cards at your grocery stores to continue earning points. Take my lululemon example from above – if I know I’m going to buy a new pair of pants, I’ll take my American Express Cobalt card to my local grocery store, purchase a gift card, and then head to lululemon to buy my pants!
But They Don’t Sell Gift Cards To My Favorite Stores
Unfortunately, you may not be able to find gift cards available for some of your favorite stores in the grocery stores. Rest assured, there are still ways to get around this problem while still using the same concept of “pre-paying” for your next purchase to meet a minimum spending requirement.
Grocery stores will sell Visa or Mastercard prepaid gift cards on the same racks where you would typically find traditional gift cards. These gift cards can be used at any store or establishment that accepts credit cards, essentially allowing us to prepay for any type of purchase.
These prepaid Visa or Mastercard gift cards come with an activation fee, ranging from $4.95 to $10.95 depending on the amount on the gift card. So while it isn’t “free” to purchase and use like normal gift cards, we believe this is a small price to pay in order to meet a minimum spending requirement and to receive a massive credit card welcome offer. Remember to purchase these cards at grocery stores in order to receive a higher points multiplier!
This is also a great way to “use our American Express cards” at retailers that don’t actually take Amex cards (think President’s Choice grocery stores like Loblaws and No Frills).
PayPower is a commonly used prepaid Mastercard in the world of points and miles. The benefit of using a PayPower card is that they are reloadable at grocery stores and charges a lower fee compared to the initial activation fee. Check out our comprehensive guide to PayPower for more information!
Risks of Purchasing Gift Cards as a Spending Method
While the relative risks of purchasing gift cards are low, we should take a minute to discuss them in order to give you the full picture. The most obvious risk to this method of spending is not being able to use the gift card that you purchased. This goes without saying, make sure you are buying gift cards that you will actually use! If you don’t shop at The Source, for example, it makes no sense to buy a gift card to their store!
When you are purchasing a gift card, make sure you triple-check the packaging and barcodes to make sure there is nothing fishy going on. While this is rare, there have been reports of people taking the gift card number from the inside of the packaging, waiting for someone to buy the card, activate it, and then use it for themselves. In my 5 years of points and miles, this has not happened to me (knock on wood!), but just know that this could happen.
For these reasons, we don’t recommend hoarding thousands of dollars of gift cards for a long period of time. Purchase amounts that you are comfortable with and plan on using in the near-ish future!
Using Gift Cards to Meet Minimum Spending Requirements in Canada
Let’s go over some of our favorite gift cards to purchase and some tips and tricks to maximize our return! A good rule of thumb I like to follow is in advance of purchasing anything substantial, especially when meeting a credit card welcome offer, I’ll check grocery stores to see if they sell a gift card.
For example, if I’m looking to buy a $1,000 television from Best Buy, I’ll go to the grocery store, buy a few Best Buy gift cards, and then head to buy the television! If I’m using my Scotiabank Gold American Express card to do this, instead of earning a standard 1,000 Scene+ Rewards points for the television purchase (1x Scene+ points per dollar), I can earn 6,000 Scene+ points (6x Scene+ points per dollar spent at Sobeys grocery stores) while also working towards the minimum spending requirements for the bigger welcome bonus!
The same strategy applies to any gifts you are getting people! Consider getting friends and family gift cards from the grocery store, or, if you have something specific in mind, head to your grocery store and buy it using a gift card!
This strategy also works for everyday expenses too! I will often buy Petro-Canada, LCBO, and Amazon gift cards at grocery stores to have on hand to earn more points than I would have if I spent directly with those stores.
Gift Cards as a Way to Use Visa & American Express at Costco
If you’re like my family and I, you spend a lot of time and money at Costco. However, you are probably aware that they only take Mastercards. While there are some excellent Canadian Mastercards out there, Visa and American Express cards are often stronger and their points are more valuable. If you’re looking to use those cards for Costco purchases, there is a way!
Costco.ca sells digital Costco Shop Cards, essentially their version of a gift card. Funnily enough, Costco.ca accepts both Mastercard and Visa (no Amex, sorry!). If you have a Visa card you are looking to meet the minimum spend on and shop at Costco frequently, I would head online to purchase a Costco Shop Card!
There is a bit of a hoop to jump through if you want to use an American Express card at Costco. The easiest way is to go to your local grocery store to purchase a prepaid Mastercard gift card or load up your PayPower Mastercard and spend it directly at the till at your local Costco, just like a normal credit card.
Alternatively, you can use the same prepaid Mastercard or Visa gift card to purchase a Costco Shop Card online and use it as a gift card. Even if you aren’t looking to meet a minimum spending requirement, this is a great way to earn 5x or 6x points on Costco purchases, albeit with a little added work.
While we’re at Costco, consider looking at their gift card aisle for some deals! Costco often sells gift cards at below cost for certain retailers! For example, you might find a $100 gift card sold for only $80! You’ll also find great deals on movie passes, local restaurants, Canada’s Wonderland, and video game console memberships or gift cards! Sometimes, they even have WestJet gift cards that are below cost!
Using Gift Cards to Meet Minimum Spending Requirements in the United States
If you have ventured into the lucrative US credit card market, you will also find yourself needing to meet minimum spending requirements for welcome offers. On credit cards that have no foreign transaction fees, such as the Capital One Venture X Rewards card, Chase Sapphire Preferred card, and the American Express Platinum card (US), you can follow the same principles we talked about above.
However, you might find yourself needing to meet USD-specific spending on cards that come with foreign transaction fees. Specifically, I’m thinking about the Chase Ink Business Unlimited credit card and the Chase Ink Business Cash credit card (if you can get US credit cards, check out our guide to Chase business credit cards). These cards often come with monstrous welcome offers, but it’s difficult to meet them in Canada because of their associated foreign transaction fees.
The Chase Ink Business Cash card is a credit card that earns cash back and is available to sole proprietors and small business owners in the United States.
$750 cash back
$7,500
$750+
$0
Yes
–
While buying groups are probably your best bet, you can still use gift cards to meet the minimum spending requirements. Certain gift cards purchased in USD can be used in Canada. The list may change over time, but here are some popular ones that you might want to consider purchasing:
- Home Depot
- Tim Hortons
- Whole Foods
- Hyatt (only usable in US, Canada, Mexico, Caribbean, Central America, South America)
- Hilton
- Marriott
- Lululemon
- Subway
- Starbucks (works across the world)
- Sephora
- Costco
- Delta Airlines
- American Airlines (only for flights originating from the US)
The best way to purchase these gift cards is with their associated US website or from Amazon (make sure you choose e-delivery). Funnily enough, Amazon US gift cards are not redeemable in Canada, so make sure you stay away! Other ones to stay away from include: AirBnB, Apple, Uber, Instacart, Chipotle, and US prepaid Visa and Mastercard gift cards (they charge a 2.5% foreign transaction fee).
These are by no means an exhaustive list of all the gift cards that work or don’t work in Canada when purchased in USD, but I hope it serves as a good start if you’re looking to fulfill some USD spending! If you do decide to purchase a USD gift card, I highly recommend you double-check the terms and conditions and do a quick internet search to confirm that they are usable in Canada.
Conclusion
Purchasing gift cards can be a great way to meet minimum spending requirements for credit card welcome offers. By prepaying for purchases that you would otherwise be making anyway, we prevent ourselves from spending unnecessary money while also meeting a spending requirement within a tight timeframe!
Even after you satisfy the spending requirement, it often makes sense to continue purchasing gift cards from grocery stores to unlock increased point multipliers for our everyday spending!
Quentin Tsang
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Thanks Quentin, another great article and food for thought!
Electronics and similar should be purchased on your credit card to get the warranty extension, so a TV at Bestbuy on a gift card is suboptimal.
The USD US gift card purchases. What is the conversion like when you spend on Canadian goods? Surely it isn’t 1:1, but how much off spot would it be? Might lose your advantage really quickly if its a terrible exchange.
Good points! Definitely forgoing insurance should be considered. And regarding forex rate, I think it would be handled independently by each store, in some cases it may work out to a 1-3% loss in fx rate, which is still considered pretty good cost-wise for min spending, especially if you’re getting any category bonus.
Yeah, abusing gift cards as described above almost guarantees an Amex ban now.
While caution should always be taken, I would say it depends. Buying a few gift cards here and there in organic amounts you would already be spending, is unlikely to result in banning. In my experience, most people who get banned are not exerting moderation.
Hi Reed, what’s a moderate amount?