How to buy AIM shares using a credit card @ 0%?

sarbaloosa

Vortigern wrote: »

Which shares are you planning to buy?

Got a few things I have been keeping my peepers on - shale and oil exploration companies that I think will double in the forthcoming months. Lets trade some info and see how we get on. What you in for?

sarbaloosa

bowlhead99 wrote: »

The Egg Money one which used to advertise that you could transfer to clear an overdraft but in reality just let you transfer it into your bank account to do whatever you liked with... became Barclaycard Cashback. I still get promo offers from them to transfer to current account although the interest free periods are shorter than the 'transfer from other card' option (I think the latest one was only to June 2015). I think they cap your transfer at 90% of the remaining credit limit but perhaps it's also capped at 90% of the card limit so that you can't artificially create a huge remaining credit limit by overpaying.

MBNA was the other big group that supported transfers to bank accounts. They're the back end of a lot of different branded cards. But they do still support transfers to current accounts:
http://www.mbna.co.uk/credit-cards/mbna-credit-card/


So there are always fees (but 4% on 32 months is not much per year), and maybe the limits aren't as high as they once were but if you want cheap finance you can still get it. You just can't make a lot of money off it by simply putting the cash in a current account -because the low interest rate environment that allows them to give you 32 months of cheap finance also means that any zero risk account is not going to pay you much interest after tax.

So the MBNA Platinum lets you transfer money from credit to current account? Wowser. Is this still the case?

Thrugelmir

sarbaloosa wrote: »

Got a few things I have been keeping my peepers on - shale and oil exploration companies that I think will double in the forthcoming months.

Plenty of oil in the markets at the moment. With the US production levels beginning to impact world markets.

bowlhead99

sarbaloosa wrote: »

Help regarding your side note?

So I have a current account with a high overdraft and then using a 0% balance transfer credit card and push the balance to it at 3%?

I thought you could only use 0% balance transfers between credit cards and not current to credit?!

Which cards allow current to credit?

Thanks,

There are a few that let you get cash into your normal bank account.

The MBNA one I linked above is an example, there are others like Virgin or Fluid (both use MBNA in the background but put their own brand over the top. See http://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs

For the card providers that do this, it used to be that they would allow you the transfer to your current account to help you clear an overdraft just like they would allow it to another card. In reality they can't see your bank account to know what your overdraft position is in real time anyway, just like they don't know how much you really have on other cards in real time. So these days they just outright say it's a money transfer and charge a different fee for it, you don't actually have to be running an overdraft to use their offer. Just give them the account details and the money is yours as long as you keep up the minimum payments.

Effectively they will just give you cash in your bank account and you can buy whatever you like with it. For them, they get the one-off % fee and then they hope that whatever you haven't paid off when the offer runs out will stay on their card rather than get transferred elsewhere, so they'll earn 19% APR from the people who are lazy and don't notice the deal has run out.

So if you end up getting one of these cards and have a nice high limit and borrow £10k, then pay them back 1% a month for 30 months, you'll still owe them £7k and it's costing you whatever high interest rate they are charging on the account in 2017. If your shares don't go up by 90% in a couple of months but instead go down by 90% in a couple of months or couple of years, you might be a bit miffed that you've paid £3k and still owe £7k at high interest rates while your shares are worth zip.

By way of example, see the charts of 3 AIM companies I've held shares in at some point in the last 3-5 years. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1410539506504&chddm=640283&chls=IntervalBasedLine&cmpto=LON:VOG;LON:BHR&cmptdms=0;0&q=LON:MARL&ntsp=0&ei=kh8TVLDUMuX6wAP7mIH4Dg

MARL for example provided some very tasty returns at one point (going from 6p to over 50p although I didn't sell any at the top, just some in the 20-40p range while keeping the rest until they were pretty much back to where I bought in at which point I gave up on them).

But if you were doing it on credit and maybe only joined the ride in August 2010 at 24p, and not cashed out after doubling on paper... waiting for more doubling... you'd be annoyed that it came back down to 24p and then 16p and then 8p by the time your interest free period ran out. If you still had a good job and good credit at that point you could try to refinance to avoid the 19% interest rate on the borrowing that's no longer supported by assets, and hope they go back up, but then the next refinancing comes up when the shares are only worth 1.25p (5% of what you first paid for them). Then you realise you've basically gambled away your borrowed money and the only thing you can do is keep extending your credit until you can afford to repay in full. Slippery slope.

BHR was another one that I bought at 10p because I thought it had potential to go back to 20p or 40p where I'd seen it before. It fell and I added more at 6p to average my price down a bit. A few years of missed targets and a crashing coal price later, they're at 0.25p...

It's very easy to find anecdotes of share doubling or ten bagging but there are just as many that disappear without trace. So, especially if you're using borrowed money, try not to buy those ones :rotfl:

Vortigern

sarbaloosa wrote: »

Got a few things I have been keeping my peepers on - shale and oil exploration companies that I think will double in the forthcoming months. Lets trade some info and see how we get on. What you in for?

I've nothing to trade, sorry. My question was just out of curiosity. Thanks for the reply.

gadgetmind

sarbaloosa wrote: »

If I have a credit card that gives me 0% for 18 or 20 months on card purchases, is it possible for me to use a broker and purchase AIM shares with the limit and qualify for the 0%?

Buying very high risk shares at very high levels of gearing?

Really?

What if the prices crash to zero (I've had 100% losses on two AIM investments) and you can't repay the capital to the card accounts?

My losses weren't geared and were small parts of a much larger portfolio. It smarts but I can regard it as a lesson well learnt. Will you be able to do the same?