FINRA Credit Card for Investing

On May 22, FINRA warned on risk of credit cards for investing.

  • FINRA reported SEC Feb. 2018 alert on risks from using cards to buy investments.

Considerations before using a credit card to invest.

  • Most licensed firms do not allow customers to invest using a credit card, therefore pressure to use a credit card to invest is suspicious and might be a sign of a scam.
  • Use FINRA's BrokerCheck and SEC's Investment Adviser Public Disclosure website.
  • Interest paid on the credit card might significantly erode return on the investment.
  • Failure to pay minimum amounts, might lead to taking on additional fees, charges.
  • Impact on credit scores, could hamper the ability to secure a loan like a mortgage.

Other advice

  • Check statements for unauthorized charges and report them to the card company.
  • Third-party wallet service or payment processor might mean less recovery options.
  • Some payment processors, Square and PayPal are licensed as money transmitters.
  • Look out for delay in withdrawal of payments, as scammers often use delay tactics.
  • Firms may hold up withdrawal request until it is too late to dispute the card charge.