How to Buy an Investment With a Credit Card

Rules designed to prevent debt-based investments make it challenging buy with a credit card.
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While nearly 80 percent of U.S. consumers have a credit card and roughly 20 billion credit card transactions are made each year, federal regulations limit the extent to which you can make investments with borrowed money. Nevertheless, with a little creativity, it is possible to buy to buy an investment with credit card.

Comparative Credit Card Investment

Step 1

Free up cash by transferring an existing debt obligation to a zero percent balance transfer credit card. Purchase an investment that does have a prepayment penalty for withdrawing funds prior to the conclusion of your credit card's zero percent period. Continue making monthly minimum payments (which can be as low as 2 percent) and pay down what you owe before the credit card's zero percent term ends.

Step 2

Create two PayPal accounts -- one linked to a zero percent credit card and another to your bank account -- using different e-mail addresses. Use the account tied to your credit card to send yourself money. Withdraw the funds from your bank account. Purchase an investment with an expected return that is greater than PayPal's credit card surcharge.

Step 3

Determine whether your credit card company applies a regular interest rate or a cash advance rate to its blank checks. If a regular rate is used, purchase an investment with the check.

Step 4

Manage your credit card account diligently. Make monthly minimum payments, avoid spending more than your income and debt obligations allow you to afford, and pay off your balance before the end of a zero percent term, if applicable. Otherwise, interest, fees and credit score damage will diminish your capital gains.

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