Gift Card vs Credit Card – What is the difference?

You have a lower spend limit on a gift card and there is no monthly statement because it is preloaded with cash.

  1. Credit Cards:
    • Imagine a credit card as a good friend who lends you some money when you need it, with the understanding that you’ll pay it back. This ‘friend’ in reality is a financial institution, like a bank, that gives you this card.
    • Your credit limit (how much you can borrow) is like the trust this friend has in you. It’s set by the card issuer based on how reliable they think you are with paying back – this is what we call creditworthiness.
    • Your friend is patient. They send you a bill every month and you can choose to repay them all at once or little by little. But remember, if you take more time, you’ll need to pay some extra in the form of interest.
    • And here’s the most important part: the way you deal with your credit card impacts your credit score – it’s like your financial reputation. Use it wisely, and you’ll be seen as more trustworthy in the eyes of lenders in the future.
  2. Gift Cards:
    • Now, a gift card is more like that sweater you received for your birthday: it’s a prepaid present meant for you to enjoy.
    • You can use a gift card to buy what you like from specific stores, or a wide range of places, all depending on the type of card.
    • The gift card is pre-loaded with a certain amount of money. Once you’ve spent that, the card is essentially empty. Unlike your credit card friend, the gift card sweater can’t be refilled.
    • The really neat thing about gift cards is that they’re worry-free. They don’t impact your credit score because they’re not a form of borrowing – it’s like getting a gift card is a free shopping trip without any strings attached.
    • One limitation though, you can’t usually use them to get cash out at an ATM or bank, like a credit card allows.


Here are some pros and cons of using credit cards and gift cards.

Credit Cards


  1. Building Credit: When used responsibly, a credit card can help you build a good credit history. This can help you get loans with better interest rates, or even help you when you want to rent a house. For example, if you always pay your credit card bills on time, it demonstrates financial responsibility and boosts your credit score.
  2. Rewards and Perks: Many credit cards offer reward points, cashback, airline miles, and other benefits. For instance, you might get 2% cash back every time you use your card at the grocery store, or accumulate points that you can redeem for travel or purchases.
  3. Emergency Funds: Credit cards can serve as an emergency fund in case unexpected expenses arise, like an urgent car repair or medical bill.


  1. High Interest and Fees: If you don’t pay your balance in full every month, you can incur high interest charges. For example, if your credit card has an annual interest rate of 18%, carrying a balance will quickly add significant costs.
  2. Potential Debt: If not managed carefully, credit card use can lead to mounting debt. It can be tempting to spend more than you can afford because you don’t have to pay it all back right away.
  3. Negative Impact on Credit Score: Late or missed payments can have a significant negative impact on your credit score.

Gift Cards


  1. Easy Gifting: Gift cards make gift-giving easier. You don’t have to worry about picking out the perfect present – just buy a gift card from the recipient’s favorite store or restaurant, and you’re set.
  2. Budgeting Tool: If you’re trying to budget your spending, a gift card can help. For instance, if you’re trying to limit your coffee shop expenses, use a pre-loaded gift card for your favorite café instead of cash or credit.
  3. No Credit Check: Purchasing or using a gift card doesn’t require a credit check, making them a good option for those with bad credit or no credit history.


  1. Limited Usage: You can only use a gift card at specific locations, and it can’t be used to withdraw cash or pay bills.
  2. Loss of Value: Some gift cards come with fees or slowly lose value over time if not used. For example, a gift card may have a monthly fee after a certain period of inactivity.
  3. No Protection: If a gift card is lost or stolen, it’s usually gone for good, unlike credit cards, which often have fraud protection.



  1. Q: Do credit cards come with a magic money genie?A: Well, it might seem like it, but no, they don’t. You have to pay back whatever you spend. And if you’re not quick enough, that genie turns into a bit of a troll and makes you pay extra in interest.
  2. Q: Can I use a gift card to withdraw a million dollars at an ATM?A: If you find a gift card with a million dollars on it, please, let us know where you’re shopping. In reality, gift cards can’t be used to withdraw cash at ATMs – and they usually don’t come with quite that much money on them.
  3. Q: Can I use a gift card to make a down payment on a house?A: Unless your house is a dollhouse purchased from the store that issued the gift card, it’s a no. Unfortunately, gift cards can’t be used for such major expenses.
  4. Q: If I lose a gift card, can I just tell it to come back like a lost puppy?A: As adorable as that sounds, gift cards aren’t quite as obedient. If you lose one, it’s generally gone for good, so keep a close eye on them.
  5. Q: If I max out my credit card, do I win a prize?A: If by prize you mean potential financial difficulty, increased debt, and a lower credit score, then yes. But those are prizes you probably want to avoid!
  6. Q: Do gift cards expire?A: Ah, the age-old question! Here’s the deal: In the U.S., most gift cards are like that jar of honey in your pantry – they don’t expire for a good long while, specifically not within five years of when you got them or last reloaded them, thanks to the CARD Act of 2009. But it’s always smart to double-check the fine print for each gift card.
  7. Q: What happens if I lose my gift card?A: Well, my friend, it’s a bit like dropping a $20 bill in a crowded street. Most times, it’s gone. Some companies might have your back if you have a purchase receipt, but don’t count on it. Better to keep it safe and treat it like cash!
  8. Q: Can a gift card be reloaded with more money?A: Some gift cards are like that bowl of chips – you can keep refilling them. Others, not so much. Check the terms of your specific card to be sure.
  9. Q: Can I use a gift card to get cash back at a store?A: Generally, no. Gift cards are typically for buying goods or services. It’s like having a coupon you can’t convert to cash.
  10. Q: Can I use more than one gift card for a purchase?A: In most cases, absolutely! It’s like using all your loose change to buy something you want. But to be sure, you might want to ask the store about their specific policy.
  11. Q: Can I return a gift card for a cash refund?A: Usually, that’s a no-go. It’s like trying to return a slice of cake after you’ve eaten it. Once you’ve got a gift card, it’s typically yours to keep (and enjoy!).
  12. Q: Can I use a gift card online?A: Most of the time, yes! Just think of it as your personal online shopping buddy. When checking out, there should be an option for you to input your gift card information.
  13. Q: Can I exchange my gift card for a different one?A: This one’s a bit tricky. Some places might let you swap, like those cool kids in the lunchroom trading sandwiches, but others don’t. Best to check the policy of where your card is from.
  14. Q: Can I use a gift card in another country?A: It depends on the card. Some are like world travelers, ready to be used anywhere, but others prefer to stay in their home country. Check the terms and conditions to know for sure.
  15. Q: What if my purchase is more than the amount on my gift card?A: No worries! It’s like when you’re at a restaurant and the bill is a little more than expected. You can use another form of payment to cover the remaining balance.
  16. Q: What if my gift card is not working?A: Oh no, your gift card’s having a bad day! Best to contact the company’s customer service for help. They’ll usually get it sorted out for you.
  17. Q: Can I send a gift card to someone else?A: Absolutely! Gift cards make fantastic gifts, hence the name. Just like sending a letter, you can mail it or even send an e-gift card via email. It’s the thought that counts!




Most store have a gift card like:


  1. Amazon
  2. Walmart
  3. Target
  4. Costco
  5. Kohl’s
  6. Macy’s
  7. Nordstrom
  8. Best Buy


  1. Gap
  2. Old Navy
  3. Banana Republic
  4. Zara
  5. H&M
  6. Forever 21
  7. Lululemon

Home Improvement:

  1. Home Depot
  2. Lowe’s
  3. Ikea


  1. Apple
  2. GameStop

Restaurants/Food Services:

  1. Starbucks
  2. McDonald’s
  3. Subway
  4. Olive Garden
  5. Chipotle
  6. DoorDash
  7. Grubhub


  1. Netflix
  2. Spotify
  3. Hulu
  4. AMC Theatres
  5. Regal Cinemas


  1. Barnes & Noble
  2. Books-A-Million


  1. Sephora
  2. Ulta Beauty
  3. Bath & Body Works

Secured Credit Cards
Seattle Seahawks Credit Card
Toyota Credit Card
Southwest Airlines Credit Cards
Discover Iridescent Card
Jacksonville Jaguars Credit Card
Tampa Bay Buccaneers Reward Credit Card
Midas Credit Card & Financing
Credit Card Hidden Fees