How to Buy Stocks With Credit Card – A Beginner’s Guide
In the last few years, technology has set the scene for many new opportunities. Many of these involve the way we use our money in our day to day life. From online banking to investment apps, we now have access to more financial instruments than ever before.
As a result of this gradual build-up of investment opportunities, many financially-oriented Millenials are wondering how to buy stocks with credit card or bank account funds.
Investing in stocks has become much easier since the introduction of stock trading applications. Nowadays, becoming an investor requires nothing more than a smartphone and a good deal of research.
You no longer need money managers or brokerage platforms. You don’t need a 6-figure investment to get started. All you need is to use the right apps on your phone and make sure it’s secured properly.
That’s right – investing is now more accessible than ever. And in this article, we will show you how to buy stocks using two of the most popular apps. Let’s get started.
Table of contents
Revolut – Best Option For Beginners
Revolut, one of the most popular banking apps, recently launched a new feature, which allows customers from European countries to buy and sell stocks.
This commission-free trading feature serves users that make their first steps in the investing space and includes more than 300 stock options from the two biggest US exchanges, namely NYSE and NASDAQ.
The app, which is mainly aimed at millennial audiences, has made stock market investing a trending activity. Not only that, but it allows anyone, no matter their financial background, to purchase shares (even fractions of shares), making the most out of their hard-earned savings.
This option is by far the easiest way to buy stocks online using your credit card or bank account. But before we show you how to do this, let’s first have a look at the pros and cons:
Revolut Stock Trading Feature Pros & Cons
As with every investing app, there are several things you should keep in mind before starting.
Pros
- Low fees – Revolut has a great commission structure that favors amateur investors. The popular banking app allows its users to perform a certain number of trades each month for free (standard-3, premium-10,metal-unlimited).
- Great for beginners – The app has a very simple interface that gives a transparent overview of all fees and charges.
- Instant purchases – Since you will not be dealing with any brokers, the purchase happens instantly, the moment you decide to place an order. A few seconds later, the stock(s) will become visible in your portfolio.
- Fractional shares – Users can use any amount of money to purchase shares. This means that users can also invest in fractions of a whole share, lowering the entry barrier into stock investments.
Cons
- Custody fees – Revolut charges 0.01% as an annual custody fee, which is calculated based on the value of one’s portfolio. While this may initially seem like a small amount, it can be quite pricey for users that decide to trade with large amounts of money.
- Limited stock options – The exchange platform supports stocks from the New York Stock Exchange and NASDAQ. While there is a selection of more than 300 options, there are other platforms that have more options available. However, if you are just getting started, this should not be a problem.
- Exchange rates – As a European customer trading US-based stocks, you will need to exchange your local currency into USD. This transaction will be subject to additional costs.
- Taxation – Exchanging US shares also entails that you will be charged with a 15% withholding tax on your capital gains. Additionally, you will also be asked to fill in a W-8BEN form.
- Supports market orders only – At the moment, Revolut does not support Limit trades. It only allows users to purchase stocks on market prices.
How to buy stocks on Revolut
The process of buying stocks on Revolut is very easy to follow. Before you get started, make sure you have the Revolut app on your phone. Also, make sure that your account is verified. Once that is in order, deposit some funds in your account to get started. Here is a quick video to help you out:
Once that is done, you are ready to buy stocks.
Step 1: Head over to the dashboard to see all the different in-app features. Click on “Trading” and a drop-down menu will appear.
You will notice from the pictures below that we already have some shares. After your purchase is completed, this is where you will see your holdings. For now, click on “Show more” to continue with the buying process.
Step 2: The trading panel will open up. As a new user of this feature, you will first need to transfer funds from your savings account into your trading account. To do this, click on “Fund” and chose the amount you wish to deposit. Once you enter the $$ value you want to deposit, click on the pink “Fund” button.
Congratulations! Your trading account is now ready. With the funds you added to your account, you can start investing in stocks.
Step 3: Once your account is funded you will return to the Trading dashboard. This time, click on “Invest”, and you will see all the available stocks. At this point, you have two options. Either you scroll until you find the stock you want to buy or you use the magnifying glass on the top-right corner to find a specific company.
In this example, we are buying Wells Fargo stock. Once you find the stock, click on “Buy” to proceed with your purchase.
Step 4: Once you define your intent to purchase a specific stock, the app will ask you how much you wish to purchase. You can either enter the number of shares or the amount of USD you wish to spend. Once that is done, click on “Preview order”. Review the information on your screen and press “Buy now”.
Robinhood – Best Option For US Investors
Robinhood serves a little more advanced investors, as it has several trading features not (yet) present in Revolut. It is also the best way for US customers to invest in stocks.
The exchange offers commission-free trading throughout the platform for trades in stocks, ETFs, and options. The latest two are obviously for experienced investors, and this is exactly why this exchange in the second place.
In this section, we will, once again, talk about the pros and cons of the platform, and give you a short walkthrough of the buying process.
In this section, once again, show how to place more advanced stock trading options with screenshots, giving once again the pros and cons of the platform.
Robinhood Stock Trading Pros & Cons
As with every investing app, there are several things you should keep in mind before starting.
Pros
- No fees – As aforementioned, Robinhood offers 0 fees and commissions for all US stock and ETF trading. The only commission is the regulatory trading fee, which amounts to $22 for each $1.000.000 in sales.
- Great interface – Both the website and the app of Robinhood have a simplistic interface. Even beginners are able to easily navigate the platform on their own and complete transactions with confidence.
- Fast verification – Creating an account at Robinhood is free, and the verification process requires only a few minutes to complete. Once that is done, you can add some funds to your account and start trading.
Cons
- No fractional shares – Users can only invest in whole shares, as compared to Revolut, which allows partial shares to be purchased.
- No DRIP options – Since you cannot purchase fractional shares, you can also not develop a Dividend Reinvestment Plan (DRIP). In essence, DRIP is an option that helps users to reinvest their cash dividends into additional (fractions of) shares.
- Limited stock options – SImilar to Revolut, Robinhood also limits their offer to the two most popular US-exchanges, namely NYSE and NASDAQ.
- No bonds – Since we define Robinhood as the advanced alternative to Revolut, you’d expect to see a lot of different investment options. However, the platform does not support bonds of any sort.
How to buy stocks on Robinhood
The process of buying shares through the Robinhood app or website is very simple and easy to follow. However, before you start, ensure that your account is verified and you have funds available. Check the steps below to get a better understanding of the process.
Step 1: Open up the Robinhood app and click on the Browser. It is the option that looks like a magnifying glass.
Once selected, you will be able to search for specific company stocks, and also see the shares you have available. In this example, we want to add some more Ford shares to our portfolio. So we entered the name of the company and clicked on “Ford”.
Step 2: Similar to Revolut, you will be able to see information and historical data of the stock’s performance. On the bottom-right corner, you will see an orange button labeled “Trade”.
Step 3:
Alternative ways to buy stocks
The apps mentioned above are certainly the fastest and most convenient way to start investing in the stock market. However, they are not the only options available. There are many different ways to buy company shares, and most of them involve some sort of support from experienced brokers. Let’s take a look at some of your options:
Money Managers – Best way to invest very large amounts of money
Similar to financial advisors, money managers are experts that can help you invest your money. The main difference with the former is that money managers take over large portfolios of money and put it to work without involving the owner of the account.
As a result, this option is useful for large amounts of money (usually starting at $100.000-$250.000) and will often have higher fees (up to 1% annually). This is an excellent option for people who are comfortable paying a high percentage to remove all investing-related stress from their lives.
Best stocks to buy
Usually, when looking to invest in stocks that grow one’s portfolio with minimum risk, a good starting point includes the following companies: Facebook, Amazon, Netflix, and Google.
Experienced investors often refer to these four American companies as “FANG” stocks. This term includes the first letter from each of these companies together and forms a name for a low-risk investment strategy. Each of the FANG companies is very successful and might grow even more in the years to come.
Apart from these basic options, it would be a good idea to follow the latest trends in the tech industry. Oftentimes, products or services offered by certain companies act as the starting point for a new era of innovation.
For example, Tesla is the leading company in electric cars, Apple is leading the smartphone market, and companies like Netflix and Facebook help us gradually move our lives into the “cloud”.
When to sell your stocks
Before selling your stocks, you need to know why you invest in the first place. Some of the main reasons people trade stocks are the following:
- To preserve their wealth through diversification (stocks are one of the options)
- To grow their wealth in the long term (Earn profit when shares increase in price)
- Avoid inflation of their savings
Now, think about your unique reason(s) for wanting to invest in the stock market. It will most likely be a combination of the reasons above. Now that you have a clear definition of your investment goals, you will have to adjust the selling process accordingly:
- If your primary goal is to make a profit, consider trading stocks (selling shares of one company to buy shares of another company).
- Sell your stocks for FIAT currency when you reach the profit you want, or before a major economic/geopolitical uncertainty affects the price negatively.
Risks to keep in mind
The stock market, just like any other investment market, has its risks. However, when looking at historical patterns, doing some research, and using common sense, one can easily avoid most of them. In a nutshell, the risks of stock trading include:
- Potential loss of funds – Your portfolio suffers if the shares you hold decrease in value. This can be avoided when using platforms that utilize stop-loss functionalities. Keep in mind, however, that small ups and downs are perfectly normal, since the supply/demand is constantly changing.
- Low liquidity – When investing in small and unusual stocks, there is a chance of low liquidity. As a result, you may not find any buyers for the shares you wish to sell. This is also known as Marketability risk. It would, therefore, be best to start by investing in well-known stocks, such as the ones found in the stock trading apps mentioned above.
- Slippage risk – This is one of the most “overlooked” risks for beginners. It involves the “hidden” costs associated with high transaction frequency. Every time you buy or sell shares of a company, you buy at the asking price and sell at the bid price. The asking price is the lowest price someone is willing to offer for your stocks, and is lower than the bid price.
- Being too conservative – Being conservative is a great characteristic of successful stock market investors. However, some are more paralyzed with fear than confidently patient. As a result, you may put all your eggs in one basket or let your portfolio decrease in value when the market turns bad.
Summing up
Investing in stocks is now easier than ever before. Whether you are buying stocks with credit card, bank account, or through a qualified partner, the process is very simple. Overall, it is a great time to start exploring your investment options. These are the main topics we covered:
- How to buy stocks through Revolut
- How to buy stocks through Robinhood
- Alternative options to invest in the stock market
- The best stocks to invest in
- When to sell your stocks
- The risks involved in the process
We hope this article helped you get a better understanding of the basics involved with the process. From this point onwards, we recommend further research, especially in your options when it comes to low-risk stock investments.
-Frequently Asked Questions-
How to buy stocks with credit card on Revolut?
Simply deposit funds from your bank card and proceed to the dashboard. From that moment onwards, all you need to do is follow the step-by-step process shown at the start of this article.
How to buy stocks with credit card on Robinhood?
As of right now, it is not possible to directly deposit money on Robinhood through your credit card. Users would need to link their bank account instead. You can find more information about the process here.
Where can I find more information on how to buying stocks with credit card?
The internet is a vast place of information. That being said, many articles are biased towards options that they benefit from (through affiliate commissions). Therefore, not all sources are reliable. Investopedia would be a great place to start your research.
Disclaimer: Don’t invest unless you’re prepared to lose all the money you invest. This is a high‑risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more at: https://go.payb.is/FCA-Info
