Can you buy stocks with a credit card?

Yahoo

a day ago

In general, you can't directly buy stocks with a credit card because it's not an accepted funding method by most brokerage firms.
There are indirect ways to use credit cards to buy stocks, such as taking out a cash advance, but you have to weigh the pros and cons of such methods. It may make more sense to simply use your credit card rewards earned from everyday purchases to help fund investment purchases.
What to know about buying stocks with a credit card
Most brokerage firms don't accept credit cards as a funding or payment method. Common ways to fund an investment account include using a bank account, a check, or a wire transfer.
For example, here are the ways you can fund a SoFi or Robinhood account:
SoFi Invest: Link your SoFi Money account, personal checking, or savings account. You can also initiate an account transfer (ACAT), rollover, check, or wire transfer.
Robinhood: Link a debit card, checking account, or savings account. You can also initiate a wire transfer.
If you do find an option to buy stocks with a credit card, consider these risks first:
Scams: The U.S. Securities and Exchange Commission warns that anyone asking you to pay for an investment using a credit card is a red flag. This is likely because most reputable investment firms don't accept credit cards as a funding method.
Interest: Credit cards have high interest rates, making them a poor funding vehicle if you plan to carry a balance. The interest could easily wipe out any potential earnings on your purchases.
Fees: Depending on the company, you might have to pay additional fees for using a credit card.How to buy stocks with a credit card
Credit card purchase
It's uncommon, but you might find a company that allows you to buy stocks with a credit card. Even if you're sure it's not a scam, there are still other risks to consider, including high interest rates and the possibility of having to pay additional card fees.
Credit card rewards
Depending on your credit card, you might have available redemption options that could help you buy stocks. For example, some cash-back credit cards let you redeem your cash-back rewards toward bank deposits or mailed checks. That gives you actual cash that you can use to fund investment accounts.
Cash advance
Some credit card issuers let you take out a cash advance on your credit card to borrow cash against your credit limit. You can use that cash to fund a stock investment, but this is typically a bad idea because of high cash advance fees and interest rates that could lead to credit card debt.
Alternatives to buying stocks with credit cards
Buying stocks with a credit card doesn't make sense in most scenarios, but there are other ways you can start investing or, if you're a beginner, learn how to start investing.
For example, you can use different investment credit cards to earn rewards that you can turn into investments:
Fidelity® Rewards Visa Signature® Credit Card: You can earn unlimited 2% cash back when your rewards are deposited into an eligible Fidelity account.
Robinhood Gold Credit Card: You can earn 3% cash back on all eligible purchases, and your cash-back rewards can be transferred to your Robinhood Financial Brokerage Account.
SoFi Unlimited 2% Card: With this card, you can earn unlimited 2% cash back on all eligible purchases. You can redeem your rewards for statement credits or distribute them to other SoFi products, including multiple SoFi investment products.
The Gemini Credit Card®: You can earn up to 1% to 4% back in cryptocurrency on eligible purchases.FAQs about buying stocks with a credit card
Can I buy stocks on Robinhood with a credit card?
No, the Robinhood investment app doesn't allow you to use a credit card to buy stocks. However, the Robinhood Gold Card allows you to earn points and then redeem them for cash back in a Robinhood Brokerage Cash Account.
Do brokers accept credit cards?
No, most brokers typically don't accept credit cards as an accepted funding method for participating in the stock market. If you want to invest in ETFs, mutual funds, or stock trading in general, most trading platforms accept debit card or bank account funding.
What are the risks of buying stocks with a credit card?
Buying stocks with a credit card can come with these risks:
High interest rates
Additional card fees
Fraud potential and scams
Damaging your credit score
Does buying stocks with a credit card hurt your credit?
Buying stocks with a credit card doesn't directly hurt your credit, but it could impact your credit if you miss any required payments. Your payment history is one of the most important factors affecting your credit score, so it's essential to pay off your credit card balances in full and on time.Can you buy stocks on Stockpile with a credit card?
No, you cannot purchase stocks on Stockpile with a credit card. Stockpile lets you buy gift cards that can be redeemed for stocks of specific companies, but these can't be purchased with credit cards.
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