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Using a credit card to invest

When thinking about using your credit card to invest, you'll typically ask two questions: Can I do it — and should I?

Updated

Fact checked

Most investment platforms won’t accept credit cards as a payment method. However, if you really want to use plastic, there are a few indirect ways to try. On the other hand, using a credit card to invest is a risky matter. Before you do it, know that most experts turn their thumbs down at the idea.

Scotiabank Value Visa Card

Scotiabank Value Visa Card

12.99 % APR

Purchase interest rate

Eligibility criteria, terms and conditions, fees and charges apply

Scotiabank Value Visa Card

Apply today and enjoy a 0.99% introductory interest rate on balance transfers for the first 6 months.

  • Purchase interest rate: 12.99%
  • Cash advance rate: 12.99%
  • Intro balance transfer rate: 0.99% for the first 6 months
  • Standard balance transfer rate: 12.99%
  • Annual fee: $29
  • Minimum income: $12,000
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Compare balance transfer credit cards for investments

Name Product Purchase Interest Rate Balance Transfer Rate Balance Transfer Fee Annual Fee Minimum Income Reward Description
BMO Preferred Rate Mastercard
12.99%
3.99% for the first 9 months (then 12.99%)
1%
$20
$15,000
Take advantage of an introductory balance transfer offer, annual fee waiver in the first year, and low purchase and cash advance interest rates.
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
Tangerine Money-Back Credit Card
19.95%
1.95% for the first 6 months (then 19.95%)
3%
$0
$12,000
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
No-Fee Scotiabank Value Visa Card
16.99%
3.99% for the first 6 months (then 16.99%)
N/A
$0
$12,000
Save with a low interest rate, no annual fee and a balance transfer offer.
Get a 3.99% introductory interest rate on balance transfers with a 0% balance transfer fee for the first 6 months. Apply by October 31, 2020.
BMO Rewards Mastercard
19.99%
1.99% for the first 9 months (then 22.99%)
1%
$0
$15,000
Get 1 BMO Reward point for every $1 spent on eligible purchases, and get 2 BMO Rewards points for every $1 spent at participating National Car Rental and Alamo Rent A Car locations.
Get a bonus of 15,000 BMO Rewards points. Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO AIR MILES Mastercard
19.99%
1.99% for the first 9 months (then 22.99%)
1%
$0
$15,000
Get 2 AIR MILES for every $20 spent at eligible AIR MILES partners, and get 1 AIR MILE for every $20 spent elsewhere.
Earn 800 AIR MILES Bonus Miles. Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO CashBack Mastercard
19.99%
1.99% for the first 9 months (then 22.99%)
1%
$0
$15,000
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Get up to 5% cash back on all eligible purchases in the first three months of card membership (up to a maximum spend of $2,000, and earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases thereafter). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
BMO AIR MILES Mastercard For Students
19.99%
1.99% for the first 9 months (then 22.99%)
1%
$0
$15,000
Earn 2 AIR MILES for every $20 spent at eligible AIR MILES partners, and earn 1 AIR MILE for every $20 spent elsewhere.
Earn 800 AIR MILES Bonus Miles. Plus, get a 1.99% introductory interest rate on balance transfers for 9 months. A 1% fee applies to balance amounts transferred.
BMO CashBack Mastercard For Students
19.99%
1.99% for the first 9 months (then 22.99%)
1%
$0
$15,000
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Get up to 5% cash back in the first three months (up to a maximum spend of $2,000, and earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases thereafter). Plus, get a rate of 1.99% on balance transfers for 9 months, with a 1% fee for every transferred balance.
Scotiabank Value Visa Card
12.99%
0.99% for the first 6 months (then 12.99%)
N/A
$29
$12,000
Save on interest for 6 months by consolidating your higher-rate balances with the balance transfer offer, and get an on-going 12.99% interest rate on purchases, cash advances and balance transfers.
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by October 31, 2020.
Scotia Momentum Visa Card
19.99%
2.99% for the first 6 months (then 22.99%)
N/A
$39
$12,000
Earn 2% cash back on all eligible gas station, grocery store and drug store purchases and on recurring bill payments (up to a $25,000 annual spend), and earn 1% cash back on all other eligible purchases (and on all eligible purchases once the $25,000 annual spend is reached).
Get a 2.99% introductory rate on balance transfers and a 0% balance transfer fee for the first 6 months. Apply by October 31, 2020.
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How to use a credit card to invest

Investing with a credit card can be risky and is usually not advised. But if you’re raring to go, here are a few ways to do it.

  1. Take out a cash advance. Once you take out your cash advance, funnel it into your brokerage. For example, you could deposit cash into your bank account, which you’ll link to your trading account. You may also be able to deposit directly into your trading account with a cash advance cheque. There are big downsides to this method, however: Cash advances typically come with fees and higher interest rates. Also, they start accruing interest immediately – there is no grace period.
  2. Leverage PayPal. Create two PayPal accounts and link one account to your credit card and the other to your bank account. Once you’ve done this, send money to yourself from the credit card–linked account to the bank-linked account. You may be able to fund your brokerage account directly through PayPal. If not, you can withdraw your PayPal funds to your bank account, which you’ll link to your brokerage.
  3. Sign up for Mylo. While the well-known Acorns app serves the US, Mylo was recently created with many of the same features and services in mind. Available to Canadians, you can use the app to make micro-investments, where the money is invested in conservative exchange traded funds (ETFs). The app allows you to link your credit cards, as well as debit cards.
  4. Use a 0% or low APR balance transfer credit card. With a balance transfer, you can consolidate your debt from other sources onto your balance transfer credit card. You can take advantage of this by acquiring money through credit and then moving your debt to a balance transfer card that offers a low or 0% rate. If you’re paying a low rate of say 1.99%, you’ll want to make sure your returns can cover that cost. For example, you can use the PayPal strategy discussed above and then use a balance transfer to move your debt to a 0% or low APR card. Just make sure you pay back the balance before the introductory 0% or low rate promotion ends. Another thing to watch out for is balance transfer fees, which can cost you between 1-3% of your transferred amount.

Learn more about balance transfer credit cards

Should you use a credit card to invest?

It’s tempting to use a credit card to purchase investments. You can extract money from your card, then take advantage of the grace period from any accrued interest. Meanwhile, you can invest that money and hopefully start collecting a return on your investment before the interest kicks in.

While that sounds great in theory, in practice it rarely pans out. Credit card APRs are generally between 8% and 24% — that’s a high price to pay to borrow money. In addition, most providers consider withdrawing funds on a credit card a cash advance transaction. A cash advance interest rate is usually higher than a purchase interest rate and you’ll also face a cash advance fee.

It’s not guaranteed that you’ll get a return on your money higher than the interest you’ll be paying to borrow the money from your credit card in the first place.

Learn more about credit card cash advance interest rates

Bottom line

As always, your investment decisions are up to you. However, many experts recommend investing with money you already have and would likely never recommend using your credit card to dive into investments. If you’re going to borrow money to invest, do your research and make sure you’re aware of any risks.

If you want to invest on credit, consider opening a margin account instead. These accounts let you borrow money to purchase investments. For example, you might pay for half of an investment then borrow the remaining funds from your broker.

Frequently asked questions

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