Can i invest with a credit card?

Oliver1191

Hi all,

Could i use my credit card to buy funds in my lisa or sipp? E.g. through hargreaves lansdown.

Equally, am i able to take out a small loan, should i ever want to invest?

Thank you!

ValiantSon

If someone will lend you the money to do so then yes you can use a loan to make investments. I wouldn't advise it, however. Invest money that you actually have.

I'm not aware of platforms that allow funding by credit card (rather than debit card).

Oliver1191

I agree with your safe-bet approach vs, but what about when investing for the long run?

With a sipp or lisa there could be 25 years of growth for me...

AnotherJoe

Oliver1191 wrote: »

Hi all,

Could i use my credit card to buy funds in my lisa or sipp? E.g. through hargreaves lansdown.

Thank you!

No.

Oliver1191 wrote: »

Hi all,

Equally, am i able to take out a small loan, should i ever want to invest?

What does that mean? Do you mean you would borrow money to invest ? Who from ? Not from an investment company like HL. If someone else lent you money then HL won't quiz you where that came from. Given your level of knowledge taking a loan would be a stupid thing to do.

Oliver1191

Plus the bonus / tax relief

bowlhead99

Typically you can't deposit funds into an ISA or SIPP with a credit card because HMRC only allow you to put cash into this form of tax wrapper - and a promise to pay a credit provider back for the funds they advance you, is not cash.

If you are not using a tax wrapper and especially if you're not using mainstream investments, you can use credit cards. For example you can load your account to make financial spread-bets at ig.com using a credit card, just like you could load your account with a credit card to place a bet on a football match or play for real money at a virtual casino with a different gaming provider.

You can of course independently borrow cash funds (loans, overdrafts, mortgages etc) and contribute that cash into your investment accounts while still owing your loan or overdraft provider the money back. Hopefully you don't lose money on the investments if you were hoping to use those funds to pay back the debt.

I've borrowed cash via a loan to help me fund a SIPP in the past - effectively just to fix a timing difference between when I wanted to get the tax break and when I was actually going to have the cashflow available if I didn't borrow it from somewhere. But you can't get a loan provider to pay it into your investment account directly, you would need to borrow from them and then separately make the investment.

Also I would not want to encourage being dishonest on a loan application about the purpose of the borrowing. It only makes it more expensive for the rest of us if you mislead them and default.

pjcox2005

Depends what you are trying to do, borrowing to speculatively invest runs a high risk of things going wrong if investments go down.

Specific borrowings, for example so you can maximise a LISA contribution in this tax year, when you know you!!!8217;ll have future income to pay off the debt is fairly sensible. In which case unlikely you can deposit direct but if you have a 0% interest card you could put all purchases on that (fuel, shopping etc) and use the cash you would have used to deposit into the LISA.

Oliver1191

Given your level of knowledge taking a loan would be a stupid thing to do

Ha ha. Thank you, anotherjoe. But would it be? I have a lot to learn equally i will never know enough. I enjoy thinking of options and looking for opportunities, so the question is speculative.

However, the last i checked, i could get a small loan for a couple of % give or take. Without researching my options at length, i already know i could buy additional pension benefit in the teachers' pension scheme. I would get 20% tax relief, then get an annual % uplift on the value of cpi + 1.6% (vs taught me that).

There may be other options out there, this is just a speculative question.

Oliver1191

I actually really like the idea of taking a small loan to fund my lisa for this tax year...

bowlhead99

Oliver1191 wrote: »

I actually really like the idea of taking a small loan to fund my lisa for this tax year...

If it's in a LISA then at least you can access it if you find you can't afford to pay back the loan because of other commitments getting in the way. Obviously in that case you would lose out by having to give back the LISA bonus and pay a penalty. And if you were using S&S LISA rather than cash LISA, then depending on your investment choices and the markets, you could find yourself taking a significant loss to get the money back to pay the debt.

But 'safer' than putting it in a pension and not being able to get it back for two decades or more.

AnotherJoe

Oliver1191 wrote: »

Ha ha. Thank you, anotherjoe. But would it be? I have a lot to learn equally i will never know enough. I enjoy thinking of options and looking for opportunities, so the question is speculative.

However, the last i checked, i could get a small loan for a couple of % give or take. Without researching my options at length, i already know i could buy additional pension benefit in the teachers' pension scheme. I would get 20% tax relief, then get an annual % uplift on the value of cpi + 1.6% (vs taught me that).

There may be other options out there, this is just a speculative question.

Fair enough and sounds sensible but that's not "investing" in the sense I think most people would use here eg buying shares or funds etc.