Key takeout
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Buying shares with a credit card is not usually permitted by reputable brokerages.
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Using a credit card to finance stock purchases can lead to high interest costs and potential scams.
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There are alternatives to using credit cards for your investment, such as using investment apps and cashback rewards.
Every investor needs to balance risk and reward, but when you try to buy stocks with a credit card, you can quickly change the odds against you. If you have disposable income, you may be considering putting these funds into the stock market to grow.
The basics of investing are very easy to master, but when you use a credit card to buy stocks, these steps will come out the window. Share why using a credit card to buy stocks is a bad idea.
Can I buy stocks with a credit card?
The truth is that most reputable brokerage companies do not use credit cards to buy and sell stocks. According to Experian.
There are creative ways to buy stocks indirectly using credit cards, but the drawbacks of doing this can be difficult to justify. For example, you can take cash advance and use this cash to buy stocks, but most credit cards charge a high fee to do so. It also usually means you are not eligible to earn points or rewards for purchasing inventory, making your transaction even less attractive.
So, does it make sense to use your credit card to buy stocks in this constantly blending market? Generally, no. In addition to the above drawbacks, choosing to do so can put you at risk of fraud. Credit score Or, you can ultimately benefit.
Most brokers cannot use credit cards to fund their accounts, but even if they can, that’s a bad idea. Most credit card interest rates far outweigh the long-term returns available by investing in stocks, so they’ve fought the toughest battles from the start. In general, investing using borrowed money is a dangerous strategy that can lead to permanent losses.
– Brian Baker, CFA, Bankrate Senior Writer, Investment and Resignation
The risk of buying stocks with a credit card
Stock purchases carry the inherent risk of losing your investment, as the market can become unstable. Even stock experts lost their shirts in the market as something changed with the formula they use to choose.
Stock prices are affected by short-term and long-term factors. Recessioneconomic slowdown, inflation and interest rate – It’s always playing. When your own money is lost, that may be a shame, but the result of paying interest on borrowed funds and running your credit limits can be even greater.
Pay more interest than you earn
When investing in stocks, you are taking calculated risks. If you can’t afford the amount you invest using a credit card, you may be more interested in your card balance than you would earn in stock investments.
Plus, if you use your credit card to buy stocks and your prices drop, you will not only lose money on your investment, but you may also be able to spend more if you don’t pay back your card balances by the deadline.
“For example, if your credit card is charged at 15% interest and your investment offers a 10% return, if you don’t repay your credit card balance before interest is accumulating, you’re borrowing more money than you’ve added to your investment,” according to the Securities and Exchange Commission (SEC).
As of May 2025, Average credit card APR It’s about 20%. The average stock market returns vary, but JP Morgan Wealth Management Peg them at about 10%. This is due to long-term and unstable investments.
Risk of fraud
If you find a brokerage company that allows you to buy stocks with a credit card, be aware that you can work with a poorly reputed agent who risks your funds. You can also see that you are facing identity theft as a result of considerable personal information is required to open a securities account, when your personal and financial information is shared with bad actors.
Similarly, sellers who pressure them to use their credit cards to buy stocks could be involved in fraud fraud. For example, Secv. We’ll take up the case of Senderov and Babazara. This includes a fraudulent multi-million dollar scheme that uses call centers to recruit investors to request high-risk binary options paid to third-party companies via credit cards or bank wires. Without acknowledging or denying the claim, the defendant agreed to pay $560,000 in disgusting and pre-decision interest, each agreed to pay a civil penalty of $350,000.
If you choose to go ahead and invest using your credit card, beware of your credit accounts for suspicious transactions. If you notice something suspicious, Please report to the card issuer immediately.
A safer way to invest with a credit card
Buying stocks is a risky business, but there are safer ways to earn returns in the market without using a credit card to buy stocks directly.
Use the investment app
Investment apps including Acorns are an easy way to start building your investment portfolio using your credit card.
Acorns allows you to link your credit card to what you call the Round-Up® program. When you use your credit card to purchase an item that costs $56.14, Acorns will be rounded up to $57 and move 86 cents to your Acorns Investment account selection. This is usually a mix of stocks and bonds.
There is Similar investment apps Being able to easily use from your mobile phone and grow your money well.
Open a credit card to invest your reward
While many reward cards earn cashback, points, or miles that can be used for future purchases, some credit cards offer the option to deposit the cashback you earn into your investment account.
Fidelity® Rewards Visa Signature® Credit Card* offers a competitive 2% cashback on all purchases. That cashback will be automatically deposited into the qualification. Faithful Resignation, IRA, or securities account. The card was a favorite of John Puterbaugh, senior editorial director at Bankrate, who automatically chose to transfer cash to his IRA.
Invest your cashback rewards
If you already have it Cashback reward cardyou can request cashback in the form of a check or deposit. Issuers may need to reach a minimum of $25 before receiving their check or deposit, but they can use this money to fund their own investments.
Consider setting up Securities account There are no fees and minimum deposits you can add as you earn rewards.
Conclusion
Borrowing money to invest in the stock market can potentially bring about more profits than any return you may notice. If you want to start investing in stocks, enter just how much you can afford today and assess all your risks in advance.
Using a credit card to buy stocks may be attractive, but doing so is risky; Big debt Or open you to a potential scam. It’s wise to use your card to earn spending in other ways, such as using cashback rewards to connect to your investments and investment apps.
*Information about Fidelity® Rewards Visa Signature® credit card is collected independently by Bankrate.com. Card details have not been reviewed or approved by the card issuer.