Buying stocks with credit cards? Yes!

A place to discuss anything... except credit cards!
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otter
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Buying stocks with credit cards? Yes!

Postby otter » Sun Sep 07, 2014 8:06 am

Having been on this forum for a little more than a year... I know many of you are avid investors- there's been enough threads about picking the right stock broker. It also goes without saying that almost everyone here loves credit card rewards; so the natural question here is: can I buy stock and get credit card points/rewards for it? Of course, the ONLY way to do that which works would be to PIF or use a card with an intro 0% APR otherwise the interest would eat up your rewards pretty quickly. Until recently, I thought it wasn't possible until last week, when I stumbled upon loyal3.

So how does it work? It kind of works using the same principle as Sharebuilder or perhaps like many DRIP programs. You just put in what stock you want to invest in, how much you want to invest (minimum $10), and pay with your credit card (or bank account, but how fun is that?) and then you're getting rewards for buying stock. By now, you might be asking what the commission is... that might be the best part- there is none! So right off the bat- you're coming out ahead(as long as you understand the "spread" between ask and buy price goes with stock buying territory).

Downsides? Well, first of all there are only about 50 stocks you can choose from but they're almost all blue-chip stocks some of which have traditionaly been long term investements (Coca-Cola, Berkshire Hathaway, Disney, Apple, and Google) and every stock is from a company which is a household name. Another downside is that the trading process happens slowly- it takes about a week or so from start to finish to buy a stock, so for those of you who like to time the market- you can't really do that with loyal3. So for many of you, those two things might be a deal breaker.

But if you're like me, you don't believe in sticking to one broker. I use Schwab and Ameritrade for their fee free ETF's. I use sharebuilder for cheap market trades of midcaps , I invest in a few no-load index funds directly with the mutual fund companies and I have a few "motifs" with motif investing because it's a fun way to "create your own mutual fund". I've already started investing with loyal3 a few days ago because there are some large companies I'd like to invest in long term. I'll keep you guys posted on my experiences. So far, all I can say definitively is that the transaction is charged as a purchase, not a cash advance which had been one of my concerns.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450


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djrez4
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Postby djrez4 » Sun Sep 07, 2014 8:50 am

Been doing Loyal3 since the GoPro IPO. I also picked up Globant S.A. when it came out. No-fee trades are nice, but I generally avoid individual stocks right now and stick with Vanguard funds through ShareBuilder. There are enough coupon codes out there that I can get free trades most of the time.
[RIGHT][size=100]- Sapphire Preferred - Freedom - Ink - Platinum - Everyday Preferred -[/size]
[/RIGHT]

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CarefulBuilder14
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Postby CarefulBuilder14 » Sun Sep 07, 2014 3:55 pm

The premise does make some sense. When the buying stocks is easy and cheap, a company's customers will often become shareholders, too. And once they are shareholders, they may become more loyal customers.

Purchases are limited to $2,500 per month per company for non-IPO stocks. That will deter some investors who are looking to invest a lot of cash quickly into a small number of stocks. But if a person is funding this from their savings each month, then it isn't an obstacle.

Normally, I wouldn't like to use batch orders because I dislike using market orders. 1% or 2% rewards provide a fairly good safety cushion, though.

I'll look into this more, but I do wonder if I'm missing something in the fine print. Running low-cost batch trades for 50 companies is easy, but the merchant processing fees on credit cards must cost them a lot.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

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djrez4
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Postby djrez4 » Sun Sep 07, 2014 4:59 pm

If you're planning on holding long term, a small price change between whenever you click and when the order is processed shouldn't make a difference. Plus, these are, for the most part, dividend growth stocks. You'll make up the difference by the end of the first quarter.
[RIGHT][size=100]- Sapphire Preferred - Freedom - Ink - Platinum - Everyday Preferred -[/size]

[/RIGHT]



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