You can buy shares with a credit card, as long as you recognise that shares can easily and quickly decrease in value as well as go up. Do your due diligence before purchasing any share with a credit card, just as you would if you were paying with cash upfront.
You should also be aware that there are both upsides and downsides to paying for a share purchase with a credit card. More details are below.
While not all brokers accept credit cards to settle share purchase transactions, many do. They are listed below.
Unsure about what trading platform to use?
Brokers that accept credit card deposits
On website
eToro
Please read the following disclaimer before applying.
Highlights
- Trade and invest in top financial instruments, including a wide selection of stocks.
- eToro is regulated by CySec, FCA, and ASIC.
- Your funds are protected by industry-leading security protocols.
- Earn up to 5.3% annual interest on your balance.
On website
Saxo Markets
Highlights
- Invest in 23,500+ stocks from ASX, New York, Hong Kong, and 50+ other global markets.
- No platform fees, no inactivity fees, and no FX fees on each trade.
- Analyse, improve and manage your risk using intuitive trading tools.
On website
IG
Highlights
- Get spreads from 1 point on the FTSE 100 and Australian 200, and 0.4 on the US 500.
- Give yourself an edge with the only Australian provider to offer weekend trading on key indices.
- Better deals for active traders. Get more value with cash rebates.
Highlights
- Get $10 when you fund Stake AUS or a FREE US stock when you fund Stake Wall Street. Do both, get both rewards.
- Make trades in seconds on over 8,000 ASX and US stocks and ETFs.
- Clear, simple, and better pricing with no hidden fees.
Pros and cons
Pros
- Delay payment. You can delay paying for your shares for up to 44 or 55 days (depending on how many interest-free days your card has), but it would be very unwise to take on a share purchase if you could not pay off your card balance at the end of the month.
- Possibly earn points or cashback. If you pay with a rewards points credit card, frequent flyer points credit card, or a cashback credit card, you may be able to earn valuable points or cash on share purchase transactions. But check the fine print on both the web page for your credit card and the share broker's website, to make sure that neither will treat it as a cash equivalent transaction or cash advance. Cash equivalents and cash advances do not earn points, and cash advances incur a cash advance fee and attract interest charges immediately.
- Meet sign-up bonus requirement. If you choose a new credit card with sign-up bonus points, there will almost certainly be a spending target to meet in the first 2-3 months of holding the card. Purchasing stocks could help you meet this target, as long as your card provider doesn't regard your share purchase as a cash advance (which means it won't qualify towards your spending target). Also, be aware that if the shares decline in value, you may lose far more than the value of your sign-up bonus.
- Take advantage of sudden opportunities. Again, if you've done your due diligence and have an appetite for risk that you can afford to fund, buying with a credit card allows you to take advantage of short-term share market opportunities (such as a share you've been watching briefly dipping to a price you think is good value) without having the cash on hand immediately.
Cons
- May increase credit utilisation ratio. A large share purchase transaction could see your credit utilisation ratio (or debt to credit ratio) increase significantly. This could have an adverse effect on your credit score.
- Possible additional fees. Your share broker may charge an additional fee – possibly 2%-3% of the transaction amount – if you fund your purchase using a credit card.
- Temptation to speculate without being able to bear losses. You should never invest an amount you cannot afford to lose. Paying with a credit card may make you lose sight of this important fact and saddle you with credit card debt at a high interest rate if your shares quickly decrease in value.
Example
You want to deposit $1,000 into a brokerage account using a credit card, buy shares, and earn points. You have savings to cover the whole amount. Here's how that would work.
- You decide to trade with eToro, one of the few trading platforms that accepts credit card deposits with no processing fee.
- The deposit is classified as a cash equivalent transaction, meaning you will not earn any rewards points.
- You incur the credit card's 2% one-off fee on cash advances, adding $20 to your balance.
- To avoid interest charges, you promptly pay off the $1,020 credit card balance in full using the funds you had set aside.
FAQs
Can you earn points on share purchases with a credit card?
It depends on whether your card provider classifies the transaction as a purchase, a cash equivalent transaction, or a cash advance. Check the terms and conditions in the Product Disclosure Statement link in the fine print on the card's web page. Purchase transactions earn points, cash equivalents and cash advances don't.
Are there any additional fees for deposing funds into a brokerage account with a credit card?
Brokers are very likely to charge a fee (usually around 2%-3% of the transaction amount) if you pay by credit card.
You may also encounter an additional fee and immediate interest charges from your credit card provider if the transaction counts as a cash advance according to their terms and conditions. Check the card's terms and conditions before proceeding.
Can you buy stocks and shares using an American Express credit card?
Yes. It is possible to buy stocks and shares using an American Express credit card. However, the transaction will be classified as a cash equivalent and immediately accrue interest at the cash advance rate.
Does using a credit card to buy stocks and shares affect my credit score?
Possibly.
Your credit score could improve if you demonstrate that you can be responsible with credit by paying off your balance at the end of each month, even when there are large transactions such as share purchases involved.
On the other hand, if your debt-to-credit ratio becomes too high as a result of large transactions, your credit score could decline.
