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Is it ok to buy stocks with a credit card?


Is it ok to buy stocks with a credit card?

It may be legal but it definitely isn't smart. If you don't have cash-in-hand to invest with, you shouldn't be buying stocks.

Do you mean, "is it legal? " - Yes

"is it a good idea?" guess that depends if you make money or not, hmmm?

um, no, that sort of thing is what started the crash that lead to the great depression

It's generally not a good idea to buy stocks on margin (credit) since it puts you at a huge risk. Also, most credit cards won't have a large enough balance to let you buy enough to earn money. You'll get nickled and dimed to death with commissions.

yeah its ok if you have a creditcard with you to use, but its not ok if you don't have one.

Absolutely NOT!

If you don't have disposable cash you should NOT be buying investments of this sort. They are variable and could go down in value the day you buy them and you'd still have the debt associated with the purchase.

The Great Depression occurred mainly due to a run up in stock prices when people were allowed to buy stocks simply by committing 10% of the purchase price up front. The trouble was once the stock market crashed one still owed this money and couldn't afford. This caused many a "paper wealthy" person to commit suicide when they suddenly had to try to cover margins.

Credit card debt it one of the worst kinds of debt there is. ESPECIALLY when you have used your credit card to withdraw cash or one of the "convenience checks" as these have both a fee on the front end AND a higher interest rate than purchases.

It's not a very intelligent thing to do, if you think about it. Credit card interest is guaranteed, stock appreciation is not.
If you buy a stock that goes down in price, Visa or Mastercard will still want their money back, plus interest.

It's not even possible to buy stocks with a credit card. A brokerage will require you to open a cash account before you can trade securities.

Could you take a cash advance to fund your cash account? Technically, yes. However, you would have to make more money on the stocks than you pay in interest on your cash advance. Cash advances generally have very high interest rates, so it is unlikely that you can do this. And, as others have noted, you could lose money on your stocks and still owe the cash advance.

It is possible to make good returns in stocks if you know what you are doing. It's not for amateurs, especially with borrowed money. Trading on margin, or any other form of borrowed money, is for sophisticated investors who have risk capital.

I have frequently used money from zero percent promotional offers on credit cards to make investments. I consider it a good way to make an easy profit off of the below market interest rate on the credit card offer. However, I have always put the money into banks accounts or money market funds, or some similar low risk investment. If you put it into something as volatile as stocks or stock mutual funds, you are facing a very real risk of your investments going down in value and needing to pay off the credit card with your own money. It's legal but risky. You would be gambling with the money, not investing.

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