It may sound like a bad idea to trade shares on a credit card and in most cases it is true. However, there are some exceptions to that rule and here we will go over when it may be appropriate to use the credit card as well as what you should consider if you choose to do so.
Choose a card with an interest-free period
In previous blog posts we have discussed taking out a bank loan to invest in shares. When you use a credit card, you also borrow money, but a credit card has some benefits that you can’t get from a bank loan. By choosing a card with an interest-free period of a few months or up to a year, you can borrow money for free if you pay back within the interest-free period. Just keep in mind that other fees may apply, such as setup fees and invoices. Finding the right credit card is a and o. A comparison on the Buffert page allows you to find the best credit card in Sweden with good terms and interest-free periods.
Credit card can be a security
Almost all investments comewith a certain risk and stock trading can absolutely be a loss business if you are unlucky. However, you can reduce the risk properly by reading and learning all about the companies you want to invest in. When you invest with your savings, you unlock them for a period of time. You should therefore only invest with money that you do not need to spend, but sometimes it is not always so black and white. For example, it can turn up really promising shares that you do not want to lose, but the savings account is empty. Using a credit card with good terms or an interest-free period can then be an option. In addition, you can pay off the credit card over a longer period of time instead of spending a large portion of the savings account, which can then not be used for other purposes. This way,
Speculation should be avoided
Whether you are a beginner or experienced in stock trading, it is always a speculation when you trade stocks. Taking out a loan for speculation should preferably be avoided, but if you choose to act this way, you should always invest long-term in stable, secure companies. Also, plan on paying off the credit card amount with your salary or other real money. Do not expect that your return from the shares can pay off the debt, because it is speculation and nothing concrete. If you are a beginner in stock trading, it is almost always better that you save the money to buy your first holding. Also, don’t forget to practice on a demo account before placing your real money.