Author Topic: Using a credit card to purchase stocks at Loyal3  (Read 198728 times)

beltim

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #100 on: March 08, 2014, 01:28:05 PM »
What a fascinating thread.

Two things:  first, the ability to buy stocks with a credit card summons my inner contrarian to wonder if we are not approaching an immanent and substantial top in both the equity and credit markets.

Second:  if the goal of some is to "manufacture spending," i.e., swipe your card for large transactions which show up as purchases and thus elicit reward points, while keeping the charge as nearly liquid as possible, then I suggest researching other and I think less risky avenues for creating spending out of thin air.  Darting in and out of stocks is not the best approach, IMO, given the large lag times between buys and sells, and the inevitable effect of slippage.

I agree that this is a fascinating thread.  On the issue of manufactured spending, one of the things that seems unique about Loyal3 is the ability to do everything from the comfort of your home.

tj

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #101 on: March 08, 2014, 01:51:33 PM »
What a fascinating thread.

Two things:  first, the ability to buy stocks with a credit card summons my inner contrarian to wonder if we are not approaching an immanent and substantial top in both the equity and credit markets.

Second:  if the goal of some is to "manufacture spending," i.e., swipe your card for large transactions which show up as purchases and thus elicit reward points, while keeping the charge as nearly liquid as possible, then I suggest researching other and I think less risky avenues for creating spending out of thin air.  Darting in and out of stocks is not the best approach, IMO, given the large lag times between buys and sells, and the inevitable effect of slippage.

I agree that this is a fascinating thread.  On the issue of manufactured spending, one of the things that seems unique about Loyal3 is the ability to do everything from the comfort of your home.

Exactly, and it has minimal risk vs the reward when you are doing it for large signup bonuses.

RobertBirnie

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #102 on: March 08, 2014, 11:45:18 PM »
Something I noticed in review of this thread is that most have utilized a quick churn strategy, selling almost immediately after buying.
Though this certainly works for those just trying to reach bonuses in a very short period of time, it obviously does greatly increase the risk of losing
money in the process.

I am wondering if others have considered a slow churn cycle in which you buy in lesser amounts, more frequently, and then sell say a few weeks
or month later once they stock is significantly above your buy price, to decrease any chance of a loss. This is still an attempt to "time the market"
which we all know is not a great idea, but as long as you are not buying more than you can afford to pay off/ are not using too much of your cc limit,
you could essentially not sell until you are well in the green. I may test this strategy for a month on more stable picks such as BRK-B, KO, MCD, and Disney. These are stocks I would purchase anyways so the main benefit of doing so on this platform is the 1% cash back, zero trade fees, and ability to dollar cost average as a result of no fees + fractional share purchase. I may even find that I want to hang onto some of these shares if they are performing well.

How about getting an 18month no interest card and using it similar to a free margin account. Just have to be *VERY* careful of a big pull back, but thats same as any margin accounts.

This is a super fascinating thread. To those of you churning cards like this, how many are you doing and how has it changed your credit score?

And my thoughts on how they make money, did you watch "Wolf of Wall Street"?
« Last Edit: March 08, 2014, 11:47:24 PM by RobertBirnie »

k-vette

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #103 on: March 09, 2014, 08:20:58 AM »
Well at the end of the week I spread out over 23 stocks.  22@$250 and $56 on one.  $56 is the profit from last time - I will hold it unless needed to cover a loss.

I was careful to only choose stocks I would consider holding if necessary.   I will sell within the time frame to pay the card back, but may hold a few days for a small potential gain.  With no fees, no reason to spread thin between 2 or 3 stocks.

thepokercab

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #104 on: March 09, 2014, 11:40:48 AM »
I need to hit $3,000 dollars in spending on my Barclay's Mastercard to get the sign up bonus, so I'm going to try this out and see how i goes.  Thanks for all the great info!

wealthviahealth

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #105 on: March 09, 2014, 11:51:00 AM »
I need to hit $3,000 dollars in spending on my Barclay's Mastercard to get the sign up bonus, so I'm going to try this out and see how i goes.  Thanks for all the great info!


@thepokercab- keep us posted on how this works out. Looks like the general consensus right now is that it is safest to buy in
several of the more stable stocks and perhaps even space these buys out over a few days, even a week or so if you are not in a huge rush.

cowstash

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #106 on: March 10, 2014, 08:49:58 AM »
Hi all: I've been thinking more about this and playing with a Google Spreadsheet to track my individual Loyal3 investing/rewards card churning results and grand totals and thought I'd share it with others here who are interested. It helps with determining when the right number of business days will pass, and quantify if the whole endeavor is worth your time based on the results.

I mocked up a sample version to allow others to see the possible utility of it: https://docs.google.com/spreadsheets/d/1LsII5sQfrVab29TY-yBjPS0aUUTNHJzLwBLtbI0jpmA/edit?usp=sharing

Here's the blank template you can use yourself in Google Docs: https://docs.google.com/spreadsheets/d/1YWVk39CC-syyHh8NHRn6ikkwjaH4wPrz2X6UvjeSdGY/edit?usp=sharing (NOTE: I set this to view only. To use it yourself, go to File > Make a Copy on this Google Docs page to save it on your own Google Drive account). The yellow columns you need to fill out yourself, the white ones should auto-calculate based on the number of business days the transactions take, the current price on Google Finance, math, etc.

If you do use it, make use of the three sheets within the workbook at the bottom -- the main sheet pulls from the credit card name and rewards rates on the second sheet and also makes you pick a ticker symbol from one of the Loyal3 stocks (on tab 3). The nice thing with Google Spreadsheets is that you can have it look up the stock price for the day to see where you're standing as an FYI, but obviously you still have to time your trade orders according to how their system works.

I'm interested in any feedback or suggestions on how to make this more useful, especially as I get more into churning larger amounts where there are higher stakes. I may try to add some more formulas that include the card reward bonuses in the Total Return calculation box since that is a big part of it as well.

tomq04

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #107 on: March 10, 2014, 10:29:11 AM »
Is anyone trying to do this with a standard high reward card, quicksilver is 1.5% and there are others that can push 2%, 5-10k/week churn could crank out ~$5k if done "full time", which is no more than 1-3 hours/week of work...pretty decent hourly rate.  My quicksilver only have a 7500 limit, but I could come up with another 7500/week on other cards, but those have only 1-1.1% reward rate which can run out of margin for error room a bit faster.  However I think that it would appear given a long enough time frame your capital gains and losses would roughly be 0%.

arebelspy

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #108 on: March 10, 2014, 10:47:57 AM »
Is anyone trying to do this with a standard high reward card, quicksilver is 1.5% and there are others that can push 2%, 5-10k/week churn could crank out ~$5k if done "full time", which is no more than 1-3 hours/week of work...pretty decent hourly rate.  My quicksilver only have a 7500 limit, but I could come up with another 7500/week on other cards, but those have only 1-1.1% reward rate which can run out of margin for error room a bit faster.  However I think that it would appear given a long enough time frame your capital gains and losses would roughly be 0%.

Is there any cap on the rewards amount you can earn?

Do you think Loyal3 will let you do it indefinitely?

I'm skeptical of the sustainability of this.
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KingCoin

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #109 on: March 10, 2014, 10:51:41 AM »
And my thoughts on how they make money, did you watch "Wolf of Wall Street"?

Are you implying that they're taking a stake in their own IPOs and pumping and dumping them?

What a fascinating thread.

Two things:  first, the ability to buy stocks with a credit card summons my inner contrarian to wonder if we are not approaching an immanent and substantial top in both the equity and credit markets.

Second:  if the goal of some is to "manufacture spending," i.e., swipe your card for large transactions which show up as purchases and thus elicit reward points, while keeping the charge as nearly liquid as possible, then I suggest researching other and I think less risky avenues for creating spending out of thin air.  Darting in and out of stocks is not the best approach, IMO, given the large lag times between buys and sells, and the inevitable effect of slippage. 

1) I don't really view this as a market euphoria thing. I view it as Loyal3 eating credit card fees in order to get people onto their platform.
2) Any methods you suggest?

k-vette

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #110 on: March 10, 2014, 11:59:15 AM »
Is anyone trying to do this with a standard high reward card, quicksilver is 1.5% and there are others that can push 2%, 5-10k/week churn could crank out ~$5k if done "full time", which is no more than 1-3 hours/week of work...pretty decent hourly rate.  My quicksilver only have a 7500 limit, but I could come up with another 7500/week on other cards, but those have only 1-1.1% reward rate which can run out of margin for error room a bit faster.  However I think that it would appear given a long enough time frame your capital gains and losses would roughly be 0%.

Is there any cap on the rewards amount you can earn?

Do you think Loyal3 will let you do it indefinitely?

I'm skeptical of the sustainability of this.

The 1.5% card does not have a cash back limit.  :)

cowstash

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #111 on: March 10, 2014, 12:04:55 PM »
The 1.5% card does not have a cash back limit.  :)

As I understand it, the 2.2% back in travel rewards from Barclay's also doesn't have an annual limit, though that certainly depends on your credit line and Loyal3's limitations (which I have yet to see tested).

thepokercab

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #112 on: March 10, 2014, 12:30:35 PM »
Is anyone trying to do this with a standard high reward card, quicksilver is 1.5% and there are others that can push 2%, 5-10k/week churn could crank out ~$5k if done "full time", which is no more than 1-3 hours/week of work...pretty decent hourly rate.  My quicksilver only have a 7500 limit, but I could come up with another 7500/week on other cards, but those have only 1-1.1% reward rate which can run out of margin for error room a bit faster.  However I think that it would appear given a long enough time frame your capital gains and losses would roughly be 0%.

Is there any cap on the rewards amount you can earn?

Do you think Loyal3 will let you do it indefinitely?

I'm skeptical of the sustainability of this.

What is it that you are skeptical about?   I'm just wondering who/how this would end up getting flag as something suspicious and ultimately prohibited?  Is there a previous activity, similar to this that was banned?  Not asking to play devil's advocate, but just genuinely curious. 

cowstash

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #113 on: March 10, 2014, 01:00:56 PM »
What is it that you are skeptical about?   I'm just wondering who/how this would end up getting flag as something suspicious and ultimately prohibited?  Is there a previous activity, similar to this that was banned?  Not asking to play devil's advocate, but just genuinely curious.

Well, I for one, am wary. This is a newer outlet for churning as far as I can tell (doing a quick Google search points here and nowhere else so far). Maybe their business model can sustain a small number of individuals churning $10k+ a month, holding stocks for a day or two at a time before selling it and withdrawing the funds. But I can also see this quickly coming to an end if it become expensive for them since they're the ones eating that fee right now. Only time will tell.

wealthviahealth

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #114 on: March 10, 2014, 01:02:44 PM »
To try and offset some of the risk with this, ( not churning points just investing and enjoying the cc bonus in general) I have been trying to create a mini index portfolio with many of these paying dividends.

Current spread:
AAPL, BRKB, KO, Walmart, Mcdonalds, Google, Disney.

What are your thoughts and do you have any suggestions for additions to help add diversity?
I realize this is far from a true index but these are the stocks I know the most about and
almost all of these have buy to strong buy ratings across the board and represent a decent mix
of growth and performance. Any one know of a stock that they offer that is even safer than Berkshire?

arebelspy

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #115 on: March 10, 2014, 01:09:30 PM »
What is it that you are skeptical about?   I'm just wondering who/how this would end up getting flag as something suspicious and ultimately prohibited?  Is there a previous activity, similar to this that was banned?  Not asking to play devil's advocate, but just genuinely curious.

Well, I for one, am wary. This is a newer outlet for churning as far as I can tell (doing a quick Google search points here and nowhere else so far). Maybe their business model can sustain a small number of individuals churning $10k+ a month, holding stocks for a day or two at a time before selling it and withdrawing the funds. But I can also see this quickly coming to an end if it become expensive for them since they're the ones eating that fee right now. Only time will tell.

This.

Yes, behavior like this, designed to take advantage of an incentive in a way the company may not have thought of is prohibited all the time.

It may work for a short while, but I'd be surprised if you can consistently do it over a long period.  Especially once word gets out, and it gets posted on a site like slickdeals.
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tomq04

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #116 on: March 10, 2014, 01:22:10 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

KingCoin

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #117 on: March 10, 2014, 01:41:54 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

For what it's worth, the actual transaction fees for a broker are close to 0. I find it remarkably unlikely that companies would pay credit card fees. Again, it's likely a ploy to populate their platform, but they'll have to alter their policy if people start abusing the privilege en-mass. Seems to be low risk though in the meantime.

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #118 on: March 10, 2014, 01:43:53 PM »
My (probably wrong) assumption was that they were making the buys/sells at slightly lower/higher prices than they're reporting to you to cover the various transaction fees.  Since it sounds like there is no "buy at $X" ... this seems doable (though not sure of the legality).  I'm probably just being cynical.

dragoncar

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #119 on: March 10, 2014, 02:15:03 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

For what it's worth, the actual transaction fees for a broker are close to 0. I find it remarkably unlikely that companies would pay credit card fees. Again, it's likely a ploy to populate their platform, but they'll have to alter their policy if people start abusing the privilege en-mass. Seems to be low risk though in the meantime.

They already have a policy in place limiting credit card purchases.  They just don't appear to be enforcing it atm.  It may be no more than a programming oversight

Fireman

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #120 on: March 10, 2014, 02:51:46 PM »
They already have a policy in place limiting credit card purchases.  They just don't appear to be enforcing it atm.  It may be no more than a programming oversight

The 10k/mo limit or something different?

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #121 on: March 10, 2014, 02:56:35 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

For what it's worth, the actual transaction fees for a broker are close to 0. I find it remarkably unlikely that companies would pay credit card fees. Again, it's likely a ploy to populate their platform, but they'll have to alter their policy if people start abusing the privilege en-mass. Seems to be low risk though in the meantime.

They already have a policy in place limiting credit card purchases.  They just don't appear to be enforcing it atm.  It may be no more than a programming oversight

Their policy is a limit of $2,500 of purchases per stock, per month. With 55 stocks on their platform, you could conceivably churn $137.5k/month through their platform without running afoul of their stated policy. Whether they have an unstated policy whereby they (or your credit card company) would cut you off sooner remains to be seen.

smedleyb

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #122 on: March 10, 2014, 03:14:35 PM »
And my thoughts on how they make money, did you watch "Wolf of Wall Street"?

Are you implying that they're taking a stake in their own IPOs and pumping and dumping them?

What a fascinating thread.

Two things:  first, the ability to buy stocks with a credit card summons my inner contrarian to wonder if we are not approaching an immanent and substantial top in both the equity and credit markets.

Second:  if the goal of some is to "manufacture spending," i.e., swipe your card for large transactions which show up as purchases and thus elicit reward points, while keeping the charge as nearly liquid as possible, then I suggest researching other and I think less risky avenues for creating spending out of thin air.  Darting in and out of stocks is not the best approach, IMO, given the large lag times between buys and sells, and the inevitable effect of slippage. 

1) I don't really view this as a market euphoria thing. I view it as Loyal3 eating credit card fees in order to get people onto their platform.
2) Any methods you suggest?

My favorite techniques involve Amazon Payments, Bluebird, and Serve:

Amazon Payments:  send my wife $1000 every month with CC, shows up as a purchase.  Drain funds into wife's checking account that I use to pay bills, including credit cards.

Bluebird: buy $500 Vanilla Reload cards at my local CVS, cost $3.95 each, up to 5K a day (10 VR cards) in a single transaction.  Load funds onto my Bluebird account which I use to pay my monthly health insurance (NYS, it's pricey), as well as some credit card bills, but not the credit cards I use to buy the Vanilla Reloads in the first place just to be safe.  Granted I don't hit the 5K limit (and there are ways to drain Bluebird via money orders at Walmart for a small fee, which I don't normally do) but I usually only load 3K a month onto Bluebird

Serve: load $200 a day for 5 days from CC directly onto serve card online from home.  Occasionally add funds via Vanilla Reload cards too. 

I've only been using these techniques for several months but the results have been solid.  Finding a CVS with Vanilla Reload cards in stock and willing to sell them to you with a points earning credit card is the main hurdle to overcome, IMO.  But all three methods in conjunction allow me to generate roughly 3K in credit card "spending" out of thin air, plus to pay the roughly 1K monthly premium for my bare-bones health care plan.  We use that manufactured spending and bill pay feature to generate hundreds of thousands of points per year off of sign up bonuses. 

« Last Edit: March 10, 2014, 03:55:01 PM by smedleyb »

thepokercab

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #123 on: March 10, 2014, 03:22:09 PM »
3/10/2014 UPDATE:

I went ahead and created an account and purchased the following:

$1,000:  Google
$600:     Berkshire Hathaway
$400:     Coca Cola. 

I received an immediate email confirmation on my BRKB purchase, but haven't received similar confirmations on my GOOG or KO purchases.  However all three are listed in my account, and my credit card shows all three as pending transactions.   

Personally- my risk tolerance is such that i'm ok doing this to try to reach my sign up reward, but not such that i would want to try to churn thousands of dollars a month. 

cowstash

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #124 on: March 10, 2014, 03:27:33 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

I think it may be true that 4-5 of the companies pay: they have the little double hearts below their logos on the stocks page -- hence why AMC Theaters is listed among America's "most beloved brands". But it's clear that most do not (I.e. Why would Berkshire, Apple or Walmart pay a service to help people buy their stock?). Look no further than the fact that they don't even have Coca-Cola's logo on the site, which tells me Coke's legal or trademark department had likely stepped in.

dragoncar

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #125 on: March 10, 2014, 03:39:49 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

For what it's worth, the actual transaction fees for a broker are close to 0. I find it remarkably unlikely that companies would pay credit card fees. Again, it's likely a ploy to populate their platform, but they'll have to alter their policy if people start abusing the privilege en-mass. Seems to be low risk though in the meantime.

They already have a policy in place limiting credit card purchases.  They just don't appear to be enforcing it atm.  It may be no more than a programming oversight

Their policy is a limit of $2,500 of purchases per stock, per month. With 55 stocks on their platform, you could conceivably churn $137.5k/month through their platform without running afoul of their stated policy. Whether they have an unstated policy whereby they (or your credit card company) would cut you off sooner remains to be seen.

Their policy is that CC can only be used for the monthly share purchases of $10, $25, or $50.  From the T&C (https://loyal3.secure.force.com/support/articles/FAQ/Terms-and-Conditions-for-Stocks-on-the-LOYAL3-Platform/):

Quote
These Terms and Conditions supplement the LOYAL3 Brokerage Account Agreement. The following are specific to these purchases:

Payment. All purchases through LOYAL3 are paid for by electronic fund transfer out of your bank account or by charge to your credit or debit card. For automatic monthly share purchases at the preset amounts of $10, $25, or $50, you can pay by electronic transfer (“ACH”) from your designated checking account or by using your credit or debit card. One-time share purchases and “Custom” automatic monthly payments (other than the $10/$25/$50 preset amounts) may be paid for by ACH only.

wealthviahealth

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #126 on: March 10, 2014, 05:40:43 PM »
I don't think that either loyal 3 or the credit card companies are going to be sweating this much.
If everyone did it perfectly, perhaps, but think about how many people will probably end up caring a balance as a
result and think about how many people have joined the loyal 3 platform as a result of the cc aspect.
Since you really can't time your buy/sell with any real degree of accuracy, I am sure that Loyal 3 isn't hurting
from people doing quick sales.

I personally found out about the company as a result of this thread and my interest was in the cc purchases but
I actually really like the ability the dollar cost average/ buy fractional shares as a result of no fees and would keep
using loyal 3 even if the cc option was revoked.

tj

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #127 on: March 10, 2014, 06:28:04 PM »
I don't think that either loyal 3 or the credit card companies are going to be sweating this much.
If everyone did it perfectly, perhaps, but think about how many people will probably end up caring a balance as a
result and think about how many people have joined the loyal 3 platform as a result of the cc aspect.
Since you really can't time your buy/sell with any real degree of accuracy, I am sure that Loyal 3 isn't hurting
from people doing quick sales.

I personally found out about the company as a result of this thread and my interest was in the cc purchases but
I actually really like the ability the dollar cost average/ buy fractional shares as a result of no fees and would keep
using loyal 3 even if the cc option was revoked.

+1. it's nice to know that you can, for example, put $50/week into Google, rather than need $1200.00 to buy a share.

wtjbatman

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #128 on: March 11, 2014, 02:56:03 AM »
My favorite techniques involve Amazon Payments, Bluebird, and Serve:

Amazon Payments:  send my wife $1000 every month with CC, shows up as a purchase.  Drain funds into wife's checking account that I use to pay bills, including credit cards.

Bluebird: buy $500 Vanilla Reload cards at my local CVS, cost $3.95 each, up to 5K a day (10 VR cards) in a single transaction.  Load funds onto my Bluebird account which I use to pay my monthly health insurance (NYS, it's pricey), as well as some credit card bills, but not the credit cards I use to buy the Vanilla Reloads in the first place just to be safe.  Granted I don't hit the 5K limit (and there are ways to drain Bluebird via money orders at Walmart for a small fee, which I don't normally do) but I usually only load 3K a month onto Bluebird

Serve: load $200 a day for 5 days from CC directly onto serve card online from home.  Occasionally add funds via Vanilla Reload cards too. 

I've only been using these techniques for several months but the results have been solid.  Finding a CVS with Vanilla Reload cards in stock and willing to sell them to you with a points earning credit card is the main hurdle to overcome, IMO.  But all three methods in conjunction allow me to generate roughly 3K in credit card "spending" out of thin air, plus to pay the roughly 1K monthly premium for my bare-bones health care plan.  We use that manufactured spending and bill pay feature to generate hundreds of thousands of points per year off of sign up bonuses.

Yep, the Saverocity guy used to post here all the time about that.

This method (Loyal3) is significantly easier, it costs nothing up front, you don't have to waste time or effort hunting down those Vanilla cards, and you can generate far more in a month than you can with even Amazon + Bluebird. Until/when/IF Loyal3 "fixes" this CC "loophole", this should honestly be the go to strategy for CC churning.

Full disclosure: After churning $7500 to earn two CC bonuses I'm done for now. So I am currently not active on Loyal3 (aside from a couple dividend paying stocks that are buy and hold).

innerscorecard

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #129 on: March 11, 2014, 03:18:52 AM »
I also did a test purchase in the thousands of Berkshire Hathaway and then sold it as soon as I could. It's been confirmed as sold, but the money hasn't hit my account yet.

This thread is top of the heap on Google on Loyal 3 and credit cards and churning. Would it be possible to make this thread at the  very least viewable to registered users only? I fear we are hoisting ourselves on our own petard.

cowstash

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #130 on: March 11, 2014, 04:07:52 AM »
I also did a test purchase in the thousands of Berkshire Hathaway and then sold it as soon as I could. It's been confirmed as sold, but the money hasn't hit my account yet.

It seems that each transaction takes 1-2 business days from processing the buy order, then a couple more days to finalize the sell order (if you put it in right before 2 PM EDT, it'll sell just before 2:30 PM EDT the same day but then you have to wait more days for it to finalize), then you have to wait for the funds to clear to be withdrawn, then you have to wait to actually have the funds show up in your bank account. It certainly does take a longer period of time than I'd normally be comfortable with, but I feel pretty confident that I won't be left holding the bag if Loyal3 disappears overnight since the credit cards I'm using would (likely) cover a claim and issue a chargeback.

cowstash

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #131 on: March 11, 2014, 04:14:35 AM »
Full disclosure: After churning $7500 to earn two CC bonuses I'm done for now. So I am currently not active on Loyal3 (aside from a couple dividend paying stocks that are buy and hold).

I'm curious about doing this as well, at least for buying and holding a high-dividend fairly stable stock like KO. How does Loyal3 do dividend payments? It's just a credit to your account that you can re-invest or withdraw? It also seems like it's possible that you can transfer the stocks out to your own broker, but then that closes your Loyal3 account, right?

massmustache

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #132 on: March 11, 2014, 10:26:22 AM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

For what it's worth, the actual transaction fees for a broker are close to 0. I find it remarkably unlikely that companies would pay credit card fees. Again, it's likely a ploy to populate their platform, but they'll have to alter their policy if people start abusing the privilege en-mass. Seems to be low risk though in the meantime.

They already have a policy in place limiting credit card purchases.  They just don't appear to be enforcing it atm.  It may be no more than a programming oversight

Their policy is a limit of $2,500 of purchases per stock, per month. With 55 stocks on their platform, you could conceivably churn $137.5k/month through their platform without running afoul of their stated policy. Whether they have an unstated policy whereby they (or your credit card company) would cut you off sooner remains to be seen.

Their policy is that CC can only be used for the monthly share purchases of $10, $25, or $50.  From the T&C (https://loyal3.secure.force.com/support/articles/FAQ/Terms-and-Conditions-for-Stocks-on-the-LOYAL3-Platform/):

Quote
These Terms and Conditions supplement the LOYAL3 Brokerage Account Agreement. The following are specific to these purchases:

Payment. All purchases through LOYAL3 are paid for by electronic fund transfer out of your bank account or by charge to your credit or debit card. For automatic monthly share purchases at the preset amounts of $10, $25, or $50, you can pay by electronic transfer (“ACH”) from your designated checking account or by using your credit or debit card. One-time share purchases and “Custom” automatic monthly payments (other than the $10/$25/$50 preset amounts) may be paid for by ACH only.

I posted this on first page but it's a transcript from my chat with customer care person... Granted, they may not be aware of their own policy but they she (they?) claimed CC purchases of 2.5k were kosher.

Also:

"Karin C:
Thank you for contacting LOYAL3. How may I help you today?
You:
Any plans to accept Discover Card?
Karin C:
I don't know of any timeline for taking Discover
You:
Also, is there a limit to the amount I can purchase on a credit card?
Karin C:
as of now, purchases can be funded via checking account, Visa and Mastercard
Karin C:
the only limit is the investment limit for the platform, which is $2,500 per stock per 30days
You:
Ok... Thanks!"

dragoncar

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #133 on: March 11, 2014, 01:28:11 PM »
I remember reading that they are having the companies themselves pay for the transaction fees, unsure about the credit card fees.  Seems to me that if they were "smart" they could limit it to debit cards (and bitcoin, but that's another topic :)  ) to reduce card transaction fees

For what it's worth, the actual transaction fees for a broker are close to 0. I find it remarkably unlikely that companies would pay credit card fees. Again, it's likely a ploy to populate their platform, but they'll have to alter their policy if people start abusing the privilege en-mass. Seems to be low risk though in the meantime.

They already have a policy in place limiting credit card purchases.  They just don't appear to be enforcing it atm.  It may be no more than a programming oversight

Their policy is a limit of $2,500 of purchases per stock, per month. With 55 stocks on their platform, you could conceivably churn $137.5k/month through their platform without running afoul of their stated policy. Whether they have an unstated policy whereby they (or your credit card company) would cut you off sooner remains to be seen.

Their policy is that CC can only be used for the monthly share purchases of $10, $25, or $50.  From the T&C (https://loyal3.secure.force.com/support/articles/FAQ/Terms-and-Conditions-for-Stocks-on-the-LOYAL3-Platform/):

Quote
These Terms and Conditions supplement the LOYAL3 Brokerage Account Agreement. The following are specific to these purchases:

Payment. All purchases through LOYAL3 are paid for by electronic fund transfer out of your bank account or by charge to your credit or debit card. For automatic monthly share purchases at the preset amounts of $10, $25, or $50, you can pay by electronic transfer (“ACH”) from your designated checking account or by using your credit or debit card. One-time share purchases and “Custom” automatic monthly payments (other than the $10/$25/$50 preset amounts) may be paid for by ACH only.

I posted this on first page but it's a transcript from my chat with customer care person... Granted, they may not be aware of their own policy but they she (they?) claimed CC purchases of 2.5k were kosher.

Also:

"Karin C:
Thank you for contacting LOYAL3. How may I help you today?
You:
Any plans to accept Discover Card?
Karin C:
I don't know of any timeline for taking Discover
You:
Also, is there a limit to the amount I can purchase on a credit card?
Karin C:
as of now, purchases can be funded via checking account, Visa and Mastercard
Karin C:
the only limit is the investment limit for the platform, which is $2,500 per stock per 30days
You:
Ok... Thanks!"

Right, I'm not saying they are following the policy.  But you agreed to the written policy when you signed up so they will always be able to enforce it if they choose to.

Ricky

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #134 on: March 11, 2014, 03:57:04 PM »
Good find, dragoncar, now let's hope their management doesn't read this thread ;) anything that sounds too good to be true usually is...

tomq04

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #135 on: March 11, 2014, 05:50:59 PM »
The worst thing that could happen is that they turn off credit card processing, until then I think i just found my wife a new day job. 

wtjbatman

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #136 on: March 11, 2014, 06:19:06 PM »
Full disclosure: After churning $7500 to earn two CC bonuses I'm done for now. So I am currently not active on Loyal3 (aside from a couple dividend paying stocks that are buy and hold).

I'm curious about doing this as well, at least for buying and holding a high-dividend fairly stable stock like KO. How does Loyal3 do dividend payments? It's just a credit to your account that you can re-invest or withdraw? It also seems like it's possible that you can transfer the stocks out to your own broker, but then that closes your Loyal3 account, right?

I honestly don't know yet. I haven't been doing it long enough with them.

That said (that I'm not 100% sure), I believe it depends on the stock. I think some drip automatically, others deposit the money into your account.

ZMonet

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #137 on: March 11, 2014, 06:23:56 PM »
Thanks for the spreadsheet cowstash.  Impressive.  You'bright that it could be improved adding in the bonuses, but it is easy to just list it as a line as a net gain (omitting the other info).

Maybe Loyal3 is allowing credit card use because: (1) they want to get their customer count up; (2) they want to be able and maybe to tout a high dollar value transaction amount.  It seems like a lot of these companies start-up so that they can sell to another bigger company. 

arebelspy

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #138 on: March 11, 2014, 08:46:52 PM »
Alright, I'm leaning towards giving this a shot.

The sign up bonuses really make it worth it (the 1-2% cash back is sort of meh, but if they will really let you churn through purchasing like 80 grand of stocks per month and eat all the fees, okay, could be worth doing for a few months til they cut it off).  For example, the spreadsheet shows ~112 made in cash back rewards, ~1400 made in sign up bonuses.

So with that in mind, who has links to the CCs with the best sign up bonuses and the best cash back rewards?  :)
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dragoncar

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #139 on: March 11, 2014, 08:50:10 PM »
Alright, I'm leaning towards giving this a shot.

The sign up bonuses really make it worth it (the 1-2% cash back is sort of meh, but if they will really let you churn through purchasing like 80 grand of stocks per month and eat all the fees, okay, could be worth doing for a few months til they cut it off).  For example, the spreadsheet shows ~112 made in cash back rewards, ~1400 made in sign up bonuses.

So with that in mind, who has links to the CCs with the best sign up bonuses and the best cash back rewards?  :)

Dude

http://www.mrmoneymustache.com/forum/welcome-to-the-forum/credit-cards-rewards-and-sign-on-bonuses-(churning)/

arebelspy

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #140 on: March 11, 2014, 08:56:24 PM »
Alright, I'm leaning towards giving this a shot.

The sign up bonuses really make it worth it (the 1-2% cash back is sort of meh, but if they will really let you churn through purchasing like 80 grand of stocks per month and eat all the fees, okay, could be worth doing for a few months til they cut it off).  For example, the spreadsheet shows ~112 made in cash back rewards, ~1400 made in sign up bonuses.

So with that in mind, who has links to the CCs with the best sign up bonuses and the best cash back rewards?  :)

Dude

http://www.mrmoneymustache.com/forum/welcome-to-the-forum/credit-cards-rewards-and-sign-on-bonuses-(churning)/

Thanks!

I know it may seem like it, but I don't read every thread on the forums.  ;)
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michaelrecycles

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #141 on: March 11, 2014, 10:54:32 PM »
For forum members who have actually used Loyal3, say you bought a stock with a credit card and sold it ASAP. Is there any cash outlay required? Or do you get the funds from the sale in time to pay the credit card balance?

dragoncar

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #142 on: March 11, 2014, 10:59:11 PM »
For forum members who have actually used Loyal3, say you bought a stock with a credit card and sold it ASAP. Is there any cash outlay required? Or do you get the funds from the sale in time to pay the credit card balance?

You usually get around 20 days to pay from the last day of your billing cycle.  So I'd guess it would be very hard, but not impossible if something went wrong with your direct deposit, to need cash outlay.  Unless you lose money on the stocks, in which case you are on the hook

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #143 on: March 12, 2014, 01:35:53 AM »
Thanks for the spreadsheet cowstash.  Impressive.  You'bright that it could be improved adding in the bonuses, but it is easy to just list it as a line as a net gain (omitting the other info).

No problem. Agreed, I just need to learn some new functions to do so. I figure I could have the spreadsheet find all transactions that use the one card and if it's greater than the minimum, then add the bonus to the Net Total. I'll post if I update the template.

ZMonet

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #144 on: March 12, 2014, 02:11:20 AM »
Just a reminder that if you're going to do this, you might as well pass some of the benefit to MMM too.  I'm pretty sure he gets a substantial referral bonus if you go through one of his links:

http://www.mrmoneymustache.com/credit-cards/

For what it is worth, I have three of the cards: Chase Saphire Preferred (50,000 point bonus), 1.2% back; Chase Southwest Card (50,000 point bonus, companion pass if you hit 110,000 points, 1 point per dollar, points are worth 1.67 cents -- about to be something like 1.43 in April -- if used on Southwest travel); and the Barclay Arrival Card (50,000 point bonus, 2.2% back if used on travel).  ALL cards have an annual fee, but the Barclays card waives it for the first year.

How long before the MMM-effect kills this deal?


Ricky

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #145 on: March 12, 2014, 07:53:23 AM »


How long before the MMM-effect kills this deal?

Speculation doesn't harbor "deals". It's no more than gambling. The "gambling" process is accentuated by Loyal3's delayed transactional process. It's one thing to try to time the market (foolishness), and it's another to try to time the market blindly (what would you even call this?). Timing the market blindly by quickly buying and selling is exactly what you're doing on Loyal3.

Keep in mind that volatility is low right now and anyone who has made anything thus far has done nothing more than gambled.

Myself, I do see value in Loyal3, but definitely not for day trading (or day to day trading since it takes so long to actually trade). Most of those companies are good, stable, dividend paying stocks so it won't hurt to buy them through a card if you definitely have the money to pay the card off immediately.

I see nothing wrong with hedging your losses with the reward of a bonus credit card but please don't think you can use this system to consistently make money through a 1-2% hedge (cc cash back rate) by thinking you can outperform the market, which is essentially the ideology behind this thread.
« Last Edit: March 12, 2014, 07:57:49 AM by Ricky »

wtjbatman

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #146 on: March 12, 2014, 08:02:31 AM »


How long before the MMM-effect kills this deal?

Speculation doesn't harbor "deals". It's no more than gambling. The "gambling" process is accentuated by Loyal3's delayed transactional process. It's one thing to try to time the market (foolishness), and it's another to try to time the market blindly (what would you even call this?). Timing the market blindly by quickly buying and selling is exactly what you're doing on Loyal3.

Keep in mind that volatility is low right now and anyone who has made anything thus far has done nothing more than gambled.

Myself, I do see value in Loyal3, but definitely not for day trading (or day to day trading since it takes so long to actually trade). Most of those companies are good, stable, dividend paying stocks so it won't hurt to buy them through a card if you definitely have the money to pay the card off immediately.

I see nothing wrong with hedging your losses with the reward of a bonus credit card but please don't think you can use this system to consistently make money through a 1-2% hedge (cc cash back rate) by thinking you can outperform the market, which is essentially the ideology behind this thread.

Little early for soap box, no?

People here aren't trying to play the market, time the market, or in any way use Loyal3 to day trade. It's a way to, pretty quickly, earn credit card bonuses with minimal (not zero) risk.

Ricky

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #147 on: March 12, 2014, 08:07:19 AM »


How long before the MMM-effect kills this deal?

Speculation doesn't harbor "deals". It's no more than gambling. The "gambling" process is accentuated by Loyal3's delayed transactional process. It's one thing to try to time the market (foolishness), and it's another to try to time the market blindly (what would you even call this?). Timing the market blindly by quickly buying and selling is exactly what you're doing on Loyal3.

Keep in mind that volatility is low right now and anyone who has made anything thus far has done nothing more than gambled.

Myself, I do see value in Loyal3, but definitely not for day trading (or day to day trading since it takes so long to actually trade). Most of those companies are good, stable, dividend paying stocks so it won't hurt to buy them through a card if you definitely have the money to pay the card off immediately.

I see nothing wrong with hedging your losses with the reward of a bonus credit card but please don't think you can use this system to consistently make money through a 1-2% hedge (cc cash back rate) by thinking you can outperform the market, which is essentially the ideology behind this thread.

Little early for soap box, no?

People here aren't trying to play the market, time the market, or in any way use Loyal3 to day trade. It's a way to, pretty quickly, earn credit card bonuses with minimal (not zero) risk.

There has been some discussion about churning through tons of money on their existing cards to theoretically indefinitely make money through a 1-2% cash back system. That's who I was directing my post towards. At the end I said its fine to trade on their system if you have enough protection against losses, ie: one time credit card bonuses.

My point was that it is NOT something you should constantly do on a day to day basis if you hope to ever gain in the long run.

Just trying to give some perspective for anyone new reading this who could get the wrong idea.
« Last Edit: March 12, 2014, 08:24:42 AM by Ricky »

wtjbatman

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #148 on: March 12, 2014, 08:32:26 AM »
It's not really my thread. At this point the thread has taken on a life of its own. I do think this is best used for credit card bonuses, but I also believe it's possible to make money with a 2% cashback card. 2% return in one week? Yes, especially in today's bull market.

AccidentalMiser

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Re: Using a credit card to purchase stocks at Loyal3
« Reply #149 on: March 12, 2014, 09:05:11 AM »
I've been reading this thread with great interest since it started.  I intend to get in on this Loyal3 gravy train while it's running with a slightly different focus.  I have a 1.5% Visa through Fidelity (ironically) that I intend to use to buy the dividend stocks I intended to buy anyway.  I'm buying and holding these for the super-long term to collect the dividends for income after ER in a few years.  Buying them through L3 will effectively cut my basis by almost 2% per transaction since I'll get 1.5% cash back and won't have to pay 7.50 to buy the stock. 

If I happen to reach 15k per year doing this, my return rate will be 2% so I may actually do a little churn early on to get to the 2% mark earlier, but I haven't made up my mind on that yet.

Thanks for using the service and providing me with all this valuable info.  Just one more reason to love MMM and the internet!