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Most people know that you can use a credit card for a wide variety of purchases, including family travel, office supplies, and even mortgages. But did you know you can buy stocks with a credit card? While it’s not always easy or the most affordable option, it is still an option. Here’s what you should know about buying stocks with credit cards.
Buying Stocks With Credit Cards
Some credit cards are better to buy stocks with than others, as you will see. The goal is to get the most out of your purchases. One of the ways you can do this is with a cash rewards card. If you’re looking for creative ways to earn passive income with some of the best cash back credit cards, keep reading.
How To Buy Stocks With A Credit Card
Most online brokerages won’t let you buy stocks directly from your credit card. One reason why is that credit card purchases have higher processing fees.
You most likely won’t earn purchase rewards when buying stock. That’s because credit card rewards programs, like Chase, treat buying stocks, foreign currency, money orders, and balance transfers as cash-like transactions.
However, these limitations don’t mean that you can’t buy stock with a credit card. You only need to get a little more creative with how you use your credit card.
Use a Micro-Investing App
Some micro-investing apps let you send funds from a credit card. One of these brokers is Stockpile. However, you will pay a 3% processing fee. As you’re trying to make money, this processing fee increases your investing costs. You pay similar fees if buying stock with a debit card.
Most apps don’t charge a fee if you transfer money from a checking account. Transfers can take three business days to complete, but waiting can be better than the processing fee.
The main reason to use a credit card for stock purchases is the instant transfer speed. For most brokerages, you will need to make a cash advance to instantly fund your investment account.
This is an expensive move as the cash advance APR for most cards can be as high or higher than the purchase APR.
Use a Brokerage Credit Card
Some brokerages offer a co-brand credit card. These investing credit cards are similar to airline credit cards or hotel credit cards. You can deposit your awards directly into your brokerage account. There may even be a redemption bonus for doing so.
Plus, some brokerage credit cards offer travel perks too. Here are the three brokerage credit cards to consider first.
Fidelity Rewards Visa Signature Card
The information for the Fidelity® Rewards Visa Signature® Card has been collected independently by Johnny Jet. The card details on this page have not been reviewed or provided by the card issuer.
The Fidelity® Rewards Visa Signature® Card has no annual fee and earns 2% back on purchases. You can deposit your rewards into your account or another family member account.
Fidelity lets you deposit your purchase rewards into these linked Fidelity accounts:
- Brokerage account
- Retirement accounts
- Fidelity Go accounts
- Cash management accounts
- 529 college savings plans
- Health savings accounts (HSAs)
- Charitable giving accounts
Fidelity doesn’t’ charge trade commissions for individual stocks. If you’re more of an index fund or mutual fund investor, many Fidelity funds only require a $1 minimum investment.
Schwab Investor Card from American Express
The information for the Schwab Investor Card® from American Express has been collected independently by Johnny Jet. The card details on this page have not been reviewed or provided by the card issuer.
Charles Schwab offers 2 different investing rewards credit cards. The entry-level version is the Schwab Investor Card® from American Express.
This card earns unlimited 1.5% back on all purchases. Your cash rewards can automatically deposit into your linked Schwab account. Like Fidelity, Schwab has $0 trade commissions when you buy stocks and ETFs.
You can also earn a $100 cash statement credit when you spend $1,000 in the first 3 months. There is no annual fee (See Rates and Fees).
However, note that the Charles Schwab Cards from American Express are only available to clients who maintain an eligible Schwab account.
American Express Platinum Card for Schwab
The information for the American Express Platinum Card® for Schwab has been collected independently by Johnny Jet. The card details on this page have not been reviewed or provided by the card issuer.
The American Express Platinum Card® for Schwab is almost identical to the consumer The Platinum® Card from American Express.
However, this Platinum Card version also lets you invest your Membership Rewards at Charles Schwab. Your points are worth 1.25 cents each when buying stock and 1 cent each for travel rewards and gift cards. You can also transfer your rewards on a 1:1 basis to the airline partners like Delta, British Airways, Emirates, and others.
You earn 5x Membership Rewards on flights booked directly with airlines or via amextravel.com, up to $500,000 per calendar year. Cardholders also earn 5x points on eligible hotels booked on amextravel.com. All remaining purchases earn 1 point per $1.
This card’s welcome bonus is the ability to earn 60,000 points after spending $5,000 in purchases in the first 3 months of account opening. Those 60k points can be used for a $750 deposit from Schwab into your eligible Schwab account.
The annual fee is also $550 (See Rates and Fees).
Redeem Credit Card Points for Cash
A final way to buy stock with a credit card is to transfer your cash rewards to your investing account. This can be your best option if you don’t invest with Fidelity or Charles Schwab. The only downside is that you will most likely need to transfer your cash rewards to a checking account first.
You probably won’t be able to directly link your brokerage account to your credit card account. But it’s worth a try if you happen to have bank details like an account number and ABA routing number.
Or, you can redeem a cash statement credit and transfer the equivalent balance directly from your checking account to your brokerage account.
Consider these three cash rewards credit cards first.
Citi Double Cash Card
The Citi® Double Cash Card earns cash back on all purchases. Cardholders can earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% when you pay for those purchases. You can start redeeming your rewards for cash with a minimum $25 rewards balance. This card has no annual fee but has a 3% foreign transaction fee.
Related: Citi Double Cash Review
Capital One Quicksilver Cash Rewards Credit Card
The Capital One Quicksilver Cash Rewards Credit Card earns 1.5% back on all purchases. Although it earns slightly less back than the Double Cash, there is no redemption minimum or foreign transaction fee. Plus there isn’t an annual fee.
New cardholders can earn a one-time $200 cash bonus after spending $500 on purchases in the first 3 months from account opening.
Learn more: Cash Back Credit Cards
Chase Freedom Flex
The Chase Freedom Flex℠ earns 5% back on the first $1,500 in quarterly rotating bonus categories (once activated). Cardholders also earn:
- 5% on travel purchased through Chase Ultimate Rewards
- 3% on dining, including takeout and delivery services
- 3% on drugstore purchases
- 1% on non-bonus purchases (1.5% for the Chase Freedom Unlimited)
There isn’t an annual fee.
Although the bonus categories change each quarter, some of the categories include:
New cardholders can earn a $200 cash bonus by spending $500 in the first 3 months.
It’s possible to use a credit card to buy stock but it’s not always the easiest or cheapest option. If you decide to, your best option is a cash back credit card or a co-brand investing rewards credit card. This is one innovative way to maximize your spending power.
Can you use a credit card to purchase stocks?
Most brokerages do not let you fund your account directly from your credit card like a purchase transaction. In most cases, you will need to redeem cash rewards or request a cash advance. The better option is redeeming your cash rewards as there isn’t a processing fee or interest charges.
Some micro-investing apps (like Stockpile) may let you fund your account with a credit card. If so, there’s a 3% processing fee. When your brokerage doesn’t accept credit card transfers, you can transfer funds with a checking account or debit card.
Where can I buy stocks with a credit card?
Fidelity and Charles Schwab offer co-brand credit cards to redeem your cash rewards directly into your investing account.
Other brokers require you to first transfer your credit card points to a checking account. Then, you can transfer the cash to your investment account.
The most valuable credit card points for stocks are cash back credit cards. Many of the best cards earn at least 1.5% back on all purchases and don’t have an annual fee.
Can I use a credit card for Robinhood?
No, Robinhood (a free investing app) currently doesn’t let you use a credit card to fund your account. You must use a linked bank account. While it takes up to 5 business days to transfer funds, you don’t pay a 3% processing fee that’s common for credit and debit card transactions.
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For rates and fees of the Schwab Investor Card® from American Express, please click here.
For rates and fees of the American Express Platinum Card® for Schwab, please click here.
Chase Sapphire Preferred® Card
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases.
- 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 2x total points on up to $1,000 in grocery store purchases per month from November 1, 2020 to April 30, 2021. Includes eligible pick-up and delivery services.
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Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities.