Can I Use A Gift Card To Pay A Bill?

Gift cards have become a go-to gift during the holiday season and for birthdays, anniversaries, and other special occasions. According to the National Retail Federation, gift card spending reached an estimated $28 billion during the 2020 holiday season alone.

With so many gift cards being given as presents, you may find yourself the recipient of gift cards to stores or restaurants you don’t frequent. Rather than letting these unused gift cards collect dust in your wallet or get lost in a drawer, you may be wondering if you can use them to pay some of your monthly bills.

How Gift Cards Work

Before looking at whether you can use gift cards to pay bills, it’s helpful to understand what gift cards are and how they work.

A gift card is a prepaid card that can be used as an alternative to cash at a particular store, restaurant, or other business. When you purchase a gift card, you are prepaying for the card’s value. The gift card then allows the recipient to make purchases up to the prepaid amount at that merchant.

Gift cards work similarly to debit cards in that you can only spend the amount that has been loaded onto the card. When you use a gift card to make a purchase the amount of that transaction is deducted from the remaining balance.

Credit cards and gift cards are not the same. Gift cards do not give you a line of credit. You can only spend what has been prepaid on the card.

Paying Bills with Gift Cards

Let’s look at whether gift cards can be used to pay bills now that we’ve talked about how they work in general. The short answer is maybe.

A gift card can’t be used to pay for all of your bills, like insurance, cable, utilities, and cell phone service. This is because most gift cards can only be used at the store that gave them to you. Like, you couldn’t pay your electric bill with a Target gift card.

However, some bills like medical bills may be paid if the provider accepts the brand of gift card you have. The key is that the merchant has to accept that form of payment.

Here are some examples of how you may be able to use gift cards to pay certain bills:

• Medical bills: Many hospitals and health providers accept major credit cards. If you have a gift card from Visa, Mastercard, American Express or Discover, you may be able to use it to pay a medical bill. You would need to contact the provider first to confirm they accept those payment networks.

• Rent payments: Some landlords and property management companies accept credit card payments for rent. As with medical bills, you could pay with a branded gift card if they accept that network.

• AT&T, Verizon, T-Mobile: Major cell phone providers allow bill payments with a branded gift card as long as you have an account with them. You can use an AT&T gift card to pay your AT&T cell phone bill, for example.

• PayPal: If a merchant accepts PayPal, you can use gift cards from places like Starbucks or Home Depot to add money to your PayPal account and then pay bills that way.

• Amazon: The e-commerce giant allows you to use gift card balances to purchase Amazon gift cards. So if you have a restaurant gift card you won’t use, buy an Amazon gift card with it, then use that to pay bills of merchants accepting Amazon Pay.

As you can see, paying bills directly with gift cards is limited based on merchant acceptance. But you may be able to indirectly pay bills by converting gift card balances into cash or applying them towards purchases at places that allow bill pay.

Other Options for Using Gift Cards

If the gift card you have can’t be used directly towards a bill payment, here are some other options for making use of unused gift cards:

• Re-gift it to someone else
• Sell it for cash on a gift card exchange site
• Trade it on a gift card swap site for a card you’ll use
• Use it to shop for gifts for others
• Donate it to charity
• Use it to purchase a merchant’s gift card you can apply towards a bill
• Apply it towards other daily purchases and bills in your budget

While you may not be able to pay your power bill directly with that Starbucks gift card you received, you can use it towards your morning coffee purchases and put the money you would have spent towards the power bill instead.

Pros and Cons of Using Gift Cards for Bills

Before deciding to use a gift card to pay a bill or expense, consider these potential pros and cons:

Pros:

• Allows you to put an unused gift card to good purpose
• Helps you avoid wasting unused gift card balances
• Provides an alternative way to pay a bill if you are low on cash
• Can help reduce your out-of-pocket spending if a merchant you have a gift card for accepts bill payments

Cons:

• Most bills can’t be paid directly with gift cards
• You may lose a percentage of the value if selling or trading the card
• Adds steps and complexity if converting to cash or merchant card first
• Possible expiration dates and fees may reduce the card’s value

Overall, paying bills directly with gift cards is limited based on merchant acceptance. But with some creativity, you can often find ways to apply unused gift card balances towards purchases and expenses in your budget. This allows you to avoid wasting gift cards and put them to use even if you can’t pay your specific bill with that particular retailer’s card.

Frequently Asked Questions

If you are considering using gift cards to pay some of your bills, you likely still have some questions. Here we’ll address some of the frequently asked questions about paying bills with gift cards:

Can I use a gift card to pay my credit card bill?

Most credit card companies and issuers do not allow you to pay your credit card bill directly with a gift card. Credit cards want payment by linking your bank account, paying online, mailing a check, or other standard payment methods.

What bills can I pay with a Visa gift card?

If a merchant accepts Visa credit and debit cards, you may be able to use a Visa gift card to pay bills with them. Common bills like utilities, cable, and insurance usually can’t be paid directly with a Visa gift card, but some medical providers, cell phone companies, and other merchants may accept them.

Can I use an Amazon gift card to pay bills?

You cannot directly use an Amazon gift card to pay utility bills, cable bills, and other common monthly expenses. However, you can purchase an Amazon gift card with your existing gift card balance and then use it towards Amazon Pay for merchants that accept that.

Is there a way to use gift cards I don’t want for bills I have to pay?

If the merchant doesn’t directly accept that gift card, you have several options. You can sell or exchange it for cash to use towards bills. You can trade it on a gift card swap site for a card you’ll use. Or purchase a merchant gift card you can apply towards a bill payment with the unused gift card.

Do gift cards expire and lose their value?

Yes, gift cards can expire and some also charge monthly fees if not used within a certain period. Be sure to check the expiration date and fees for any gift card you are planning to use towards bill payments. The value may decrease over time.

The Bottom Line

At the end of the day, being able to use a gift card to directly pay a bill depends entirely on whether the merchant accepts that form of payment. Most utilities, cable companies, lenders, and other service providers will not take gift cards. But for bills from merchants that accept credit cards, you may be able to leverage a branded gift card towards that expense. With some additional steps like exchanging or trading, you can sometimes convert unused gift cards into payment towards other obligations as well. So while paying bills directly with gift cards is limited, gift cards don’t have to go to waste. With a little effort, you can often find opportunities to apply their value towards purchases and expenses, even if not the specific bill you had hoped.