Can I Buy Stocks With A Credit Card?

Can I buy stocks with a credit card? Yes, you can invest in stocks with a card card but it’s a bad idea. There are better borrowing options. I am not a licensed investment advisor and this post is not investment advice.

With all the stock market volatility going on as of late, you might be feeling a bit of investment FOMO.

As such, you might be tempted to invest with a credit card.

But is it even possible to buy stocks with a credit card?

Even for me over here in Canada—can I buy stock with a credit card?

In this article, I will confirm if it is possible to buy stocks with a credit card and look at if it is even a good idea. I’ll also look at a couple alternative options.

Let’s dive in.

Yes, the short answer is that you can buy stocks with a credit card using the cash advance features.

If your credit card allows it, you could transfer cash from your credit card to your bank account. From there, you could make a contribution to your brokerage account to invest.

Alternatively, you could take a cash advance from an ATM and then deposit it to your brokerage account. But that is a tedious and expensive process.

Should You Buy Stocks With A Credit Card?

No!

You should not buy stocks with a credit card.

Simply put, the interest rate is too high and cash advance fees are too costly to make money.

Overall, it’s just too risky. It makes the investment process more risky than it has to be.

Frankly, you should only invest in stocks if your credit card is already paid off. That will likely lead to a better investment return than paying a 19.99% rate on your debt.

Are There Any Advantages To Buying Stocks With A Credit Card?

I really can’t see any advantages besides the quick access to cash.

The only other advantage I can see from using a credit card to buy stocks is to collect points.

If you have the kind of credit card that offers points for spending, you will at least get some money back.

Otherwise, there are only disadvantages to using a credit card to buy stocks.

It increases the risk, costs more money, and it also adds an extra layer of pressure to generate even higher returns.

Furthermore, it forces investors into a shorter time frame, if they plan to pay off the credit card balance shortly.

Alternative Credit Options

Of course, it’s best to pay off all your debt before investing.

However, if you insist on using credit to invest, there are smarter ways to do it.

Rather than buying stocks with a credit card, you should open a margin account or borrow from a line of credit.

At least the interest rate on either of these options will be lower than the rate of a credit card.

Depending on your financial situation and the economy, you might be able to borrow to invest at a 4% rate instead of close to 20%.

In turn, it will be a lot easier to generate a profit on your investments. It’s a much more sensible way than using a credit card to invest.

Final Thoughts

So can I buy stocks with a credit card?

Yes, it is possible to buy stocks with a credit.

However, it’s a terrible way to invest that offers practically zero advantages.

Frankly, it’s best to pay off your credit card before you begin investing at all.

If you must use credit to invest, there are better alternative options, such as a margin account or even using a credit line to invest.

In summary, it is my humble opinion that using a credit card to back stocks is a horrendously bad idea.

It will most likely lead to you losing money, so you are better off saving and building up a portfolio slowly.

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Can I Buy Stocks With A Credit Card?