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Using a credit card to invest

Using a credit card to invest

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

Most investment platforms won’t accept credit cards as a payment method. But if you really want to use plastic, you have a few roundabout ways to try.

Whether using a credit card is a good idea is a separate issue. Before you do it, know that most experts turn their thumbs down on the idea.

How to use a credit card to invest

As we’ve discussed, investing with a credit card can be risky. 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 check.

There are big downsides to this method, however: Cash advances typically come with fees and higher interest rates. Also, they often start accruing interest immediately.

2. Leverage PayPal.

Create two PayPal accounts. Then link one account to your credit card and the other to your bank account. Once done, 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 Acorns.

With the Acorns app, you can make microinvestments in exchange traded funds (ETF). And the app allows you to link your credit card. Learn more about Acorns.

4. Use a 0% APR balance transfer card.

With a balance transfer, you move debt from other sources onto your credit card. You can take advantage of this by acquiring money through credit and then moving your debt to a balance transfer card. For example, you can use the PayPal strategy we discuss above and then use a balance transfer to move your debt to a 0% APR card.
What is a balance transfer?

Compare credit cards

Name Product APR for Purchases (Purchase Rate) Intro APR for Balance Transfer Annual Fee
14.74%, 18.74% or 24.74% variable
0% for the first 15 months (then 14.74%, 18.74% or 24.74% variable)
$0
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees
12.74%, 16.74% or 20.74% variable
0% for the first 18 months from account opening (then 12.74%, 16.74% or 20.74% variable)
$0
An 18-month 0% Intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
16.74% variable
0% for the first 15 billing cycles (then 16.74% variable)
$495
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
16.74% variable
0% for the first 15 billing cycles (then 16.74% variable)
$195
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
16.74% variable
0% for the first 15 billing cycles (then 16.74% variable)
$995
Earn points every time you spend. Luxury Card enhances your purchasing power by providing you with one (1) point for every one dollar ($1) you spend. Every purchase gets you closer to the rewards you want.
24.74% variable
$39
Designed to help build credit history with no deposit required and access to benefits.
23.9% variable
$75 annual fee for the first year ($99 thereafter)
With this card you get a 23.9% Variable APR.
19.74% to 25.74% variable
$0 to $99
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
14.74% to 25.74% variable
0% for the first 15 months (then 14.74% to 25.74% variable)
$0
Earn 10,000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
14.99% to 24.99% variable
0% for the first 12 statement closing dates (then 14.99% to 24.99% variable)
$0
Earn more cash back for the things you buy most.
14.74% to 25.74% variable
0% for the first 15 months (then 14.74% to 25.74% variable)
$0
Earn $200 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $200 back in the form of a statement credit.
17.74% to 24.74% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50,000 points when you spend $4,000 on purchases within the first 3 months of your account opening, and an additional 30,000 points when you spend a total of $30,000 on purchases within the first year of your account opening.
17.74% to 24.74% variable
$450
Earn 50,000 BONUS POINTS after spending $4,000 on purchases in the first 3 months from account opening* — that's $750 toward travel when you redeem through Chase Ultimate Rewards®.
14.74% to 24.74% variable
0% for the first 12 months (then 14.74% to 24.74% variable)
$95
15,000 Membership Rewards points after you spend $1,000 in the first 3 Months of opening your account
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
$0
Earn unlimited 1.5% cash back on every purchase - it's automatic. No minimum to redeem for cash back.
17.74% to 24.74% variable
$95
Earn unlimited 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases.
14.74%, 20.74% or 24.74% variable
0% for the first 15 months (then 14.74%, 20.74% or 24.74% variable)
$0
Earn unlimited 1.5% cash back on every purchase, every day
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
$0
Earn 5% Cash back in bonus categories up to $1,500 every quarter. Earn 1% Cash back on all other purchases.
16.74% to 24.74% variable
$0
20,000 online bonus points offer. Ditch the restrictions of typical airline rewards cards. Any airline, any hotel, anytime. No blackout dates.
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
$0
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
14.74%, 21.24% or 24.74% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50,000 bonus miles after spending $3,000 on purchases within the first 3 months from account opening.

Compare up to 4 providers

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.

That sounds great in theory, but in practice it rarely pans out. Credit card APRs are generally between 15% and 20% — that’s a high price to pay to borrow money.

There’s more bad news: The average annual return for the S&P 500 is 10%. If you adjust for inflation, that figure drops to 7%. When you’re paying 15% APR to borrow money via credit card but only making a 7% return on your investments, you lose on the math.
How credit card interest and grace periods work

What about 0% APR cards?

Let’s say you have a card that offers 0% APR for 12 months. Should you take out money from the card to invest?

You certainly have more time for your investments to work out. But according to many experts, you’re still playing a risky game. If you take out a lot of money but your investments don’t appreciate within 12 months, you’ll be hard-pressed to pay back the money you’ve borrowed.

Worse, after 12 months your cushy 0% APR has expired — and it’s probably replaced by a high APR. So while you’re under pressure to pay off your balance, your debt is accumulating interest at a high clip.

As always, your investment decisions are up to you. But many experts recommend investing with money you already have. And if you’re going to borrow money to invest, do your research and know what you’re doing.

Instead of using a credit card to invest …

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

Kevin Joey Chen

Kevin Chen is a world-travelin', copy-writin', Game of Thrones-watchin' credit cards writer for finder.com. When he's not crunching the numbers on bonus points and comparing APRs, you can find him flying around the world in search of the perfect beer.

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