Gift card for Materials on already quoted job-(Client asking)

I'm not sure if this is the right place to post this, so I apologize if I'm violating any rules. I'm seeking advice regarding the situation we have with a contractor/handyman who is doing some work for us.

A little background: we have a crack in our foundation, and we've been experiencing intermittent water leaking into our basement during the unprecedented rainfall we've had over the last few weeks. We have been working with our insurance company, which sent a remediation company and contractor to assess the situation. They found moisture in the basement and removed some drywall to investigate the source of the leak. However, they were unable to locate the leak and mentioned they would schedule additional work on the exterior to find it. This follow-up work never happened.

Since we needed repairs done quickly, we decided to hire an independent contractor, who provided a reasonable quote with a more detailed scope of work than the insurance company's initial estimate. The contractor and his team have already dug down to the foundation on the outside and repaired the crack. They are now going to start the interior repairs, which will involve sealing the crack from the inside and replacing any drywall that was removed by the insurance company, as well as any additional drywall they take out.

Now comes the tricky part. My mother has a $522 gift card from Home Depot. She showed it to the contractor and suggested he use it to purchase the materials for the rest of the job. He said he could use the gift card, but he would only be using $400 of it. He mentioned something about how he finances materials or jobs, or the gift card itself? Or he would be financing the remaining $122? Or that he would be using the rest over time, or over 6 months, on other jobs? I don't know--he kept throwing out the word financing. To be fair, he tried his best to explain it to us. But I am still unclear about what he meant by it all. I assume it has to do with the fact that he already provided a quote for materials, and also that he is limited to using the gift card only at Home Depot and not elsewhere. I'm also confused about why he would keep the remaining $122. Why wouldn't we get the gift card back with the unused balance?

I don't think the contractor is being dishonest; he has been reasonable and personable throughout the process. He previously completed a job for us, and we were satisfied with both the cost and the results. However, I just can't understand his reasoning on this matter. Any light that can be shed on this would be much appreciated.