how common is it fro someone to use credit cards to buy stocks?

Question

just missed the apple boat because i didnt have anything to invest and i dont want to miss an opportunity like that again.

Answer 1

It's not common and it's a very dangerous practice as someone already mentioned. If you do no have anythng to invest, work harder and save up first. You should have enough cash in your bank account for 3-6 months of living expenses before putting any money in your brokerage account.

While you are saving up money, you can always read books, attend seminars, and do paper trading to gain knowledge and experience on the subject. Do not rush into the market becuase you think you missed certain opportunity. This will cost you your shirt because you will carry the very same emotional mentality when you invest.

Opportunities are out there everyday in the market no matter the market is up or down (and no matter Apple is up or down). And investing (or trading) is a practice for lifetime.. it's not an one shot thing... My portfolio has more than a dozen of stocks outperformed Apple in the pass 7 months...so do not hurry.. there is nothing you need to hurry because there are always new opportunities when the market open the next business day.

So, your tasks for now:
1. Save up emergency funds for 3-6 months of living expenses
2. .Save up for investment account (Anyway, most good stock shares are not cheap in it's absolute value term...you need more than $13200 to buy 100 shares of AAPL )
3. Study investing and trading by read a lot of books and attending seminars
4. Gain experience by paper trading until you are financially ready for the real stuff.

Best luck to you and hope this helps!

Cheers,
Sal

Answer 2

He got a cash advance on his credit card, at a stupidly high interest rate. Dumb move. He did not break a law. Brokerages don't take credit cards as payment on stocks. It's an option or a cash purchase. He is just really tragically stupid and has no business trading, for obvious reasons.

Answer 3

There are better ways of raising money than using a credit card.The first thing you have to do is compare the interest rates. Credit cards,depending on where you live, are around the 14% interest rate while a margin loan is around the 10% region.The advantage of the loan is you can get more cash and pay back over a longer period of time.
Another thing to look at is that you must make a profit of at least 10% on your stocks just to break even.

Answer 4

Never buy stocks with credit cards. The best investment you can make is pay off all your debt and then have 4 months of expenses in CD's. After that invest in stocks but only with cash.

Answer 5

Look into Dividend Reinvestment Plans. You can buy stocks with just a little money a month. They pay dividends, which means they're more likely to rise than the regular market, and you make money without having to sell them again. Look up www.dripinvestor.com and www.moneypaper.com. Otherwise, the credit card idea is lousy: yes, stocks go up, but they can go down, too, and then you owe money and have nothing to show for it.

Answer 6

Surprisingly, it's not such a bad idea - as long as you are fully aware of the risks.

Best case scenario: get a $2,000 cash advance, open a margin account, buy $4,000 worth of stock, double the $$ (beginner's luck), pay off the $2,000, keep the $6,000 less interest.

Worst case scenario: lose it all on a bad move, default on your credit card, ruin your credit and job prospects for 7 years.

If that is acceptable, consider SBEI - they are going through a reverse merger with Neonode that has just rolled out its version on iPhone.

Answer 7

I have never heard of it being done, and doubt that any brokerage would accept a credit card charge as payment for a stock. The credit card commission would exceed the brokerage commission. I always wrote a check.

Answer 8

You would need an awfully low interest rate on that card to make it profitable and considering the risk of investing it would be a penny wise and a pound foolish.

Answer 9

You would be crazy. If you cannot afford to lose 50% of what you "invest" in stocks, you shouldn't buy any.

Answer 10

all i can say is borrowing money and using credit to buy stock is what eventually caused the stock market to crash in 1929. Personally, i think borrowing money and using credit to buy anything is dangerous and discouraging. if you can't pay cash - don't buy it.