Since Google introduced Gift Cards, there’s been a few limitations, namely the inability to pay for hardware, as well as paying for subscriptions in Newsstand and more recently for Google Play Music All Access. While you still can’t purchase hardware with a gift card, you can now pay for your All Access and Newsstand subscriptions with Gift Cards.
The support page for Google Play Gift Cards now lists : Music All Access, Newsstand, Newsstand subscriptions as valid options you can pay for with your credit.
To update your Google Play Music All Access subscription, it appears that you may have to cancel your subscription and then sign up for it again selecting ‘Gift Card’ as the payment option. Even though you cancel, this should maintain the cheaper signup price that many users scored for signing up to Google Play Music All Access when it was first announced.
Now, just solve the hardware issue Google and we can all start stock-piling Gift Cards all year in preparation for the yearly Nexus release cycle.