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Q: Purchasing securities (stocks, bonds) ( Answered 5 out of 5 stars,   0 Comments )
Subject: Purchasing securities (stocks, bonds)
Category: Business and Money > Finance
Asked by: portia-ga
List Price: $50.00
Posted: 07 Sep 2002 12:51 PDT
Expires: 07 Oct 2002 12:51 PDT
Question ID: 62644
Is it legal to buy securities (stocks, bonds) with a credit card?
Subject: Re: Purchasing securities (stocks, bonds)
Answered By: kyrie26-ga on 07 Sep 2002 14:37 PDT
Rated:5 out of 5 stars
Hello portia-ga!

Thank you for your question. I was really curious about this too
myself, so I had fun researching this topic for you.

Let's break your question into two parts, A. Stocks,  and B. Bonds :

==== A. STOCKS ====

Q : Is it legal to buy stocks with a credit card?

A : YES, but it is not common.

After looking through various Web pages, including online stock
brokerages, I realized that (1) there is no mention that buying stock
with a credit card is illegal, and (2) there were no stock brokerages
I found that accept stock purchases with a credit card.

The answer, as it turned out, is this : it is NOT illegal, but it is
not common either because you need to have an established relationship
with the stock broker (be it real or online) before you can buy on
credit, ie. using a credit card. The following article explains it
perfectly :


The Online Investor: Knowledge Center


"There's been some talk of using a credit card to buy stock, and some
firms have offered this to highly credit worthy investors. But in
general, it has not been widely used. Even if you have the
opportunity, don't use your credit card to pay for stock. The interest
on the borrowed money is at least 18% and if you make that in a year
on a stock, you're doing very, very well. Also, there is always a fee
for taking a cash advance which is what buying a stock is. And
finally, you're borrowing money to buy something that might go down.
Imagine owing the credit card and having a stock that's worth less
than the debt. If this option is available, don't use it."


==== B. BONDS ====

Q : Is it legal to buy bonds with a credit card?

A : YES! 

Instances of this as follows :


Buy T-Bills and Bonds Online

"The Bureau of the Public Debt is one of the few government agencies
that lists making money among its missions. Through the sale of
T-bills, bonds and savings bonds, the Bureau of the Public Debt raises
money for government operations and monitors government indebtedness."

"Now, with its TreasuryDirect Web Site, the Bureau of the Public Debt
combines E-government and E-commerce to allow Internet investors from
individual to banks buy T-bills and bonds using a credit card or
electronic bank transfer."


Buying Savings Bonds on the Internet

"You can now skip the lines at the bank and buy United States Savings
Bonds on the Internet using a credit card. The system, which uses
Secure Electronic Transaction (SET) technology developed by
MasterCard, Visa, GTE, IBM, Microsoft, Netscape and others, is
considered safe. (Go there now.) You do need a browser with encryption


Other ways to buy U.S. Savings Bonds

"You can buy Savings Bonds directly from the Savings Bond Connection,
24 hours a day, seven days a week, using a secure credit card
transaction. It's perfect for buying Savings Bonds as gifts, or for
other one-time purchases."

BondYourself_com - your PLACE on the web for all types of surety bonds

"Ordering by credit card on the net is still relatively new. Ordering
bonds on the Internet is very new. We want you to feel comfortable as
you place your order for bonds and bond supplies on


However, it is always recommended that you should pay up your credit
card as soon as possible on a bond purchase, because bond returns
(interest rates) are generally lower than credit card interest rates,
so it wouldn't make sense to buy a bond with a credit card, other than
for the short term. Again, it would be better to pay off your credit
card first, then buy bonds with cash.

Google Search Terms :

purchase OR buy stock OR stocks "credit card"

Hope that answers your question. If you need further clarification,
please ask. Thank you for using Google Answers!


portia-ga rated this answer:5 out of 5 stars
Thank you, kyrie26-ga for your terrific answer and links to
information.  This one has been hanging over me for a long time, and I
am sufficiently satisfied that I don't have to consult a securities
lawyer about this.

There are no comments at this time.

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