Loyal3 Ending Stock Purchases with a Credit Card

Got an email today from Loyal3. Bad news! The website will be terminating credit card purchases of stocks on Loyal3. The email states that as of 11/18/2014 you will no longer be able to use a credit card to purchase stocks. The email continues to say that monthly purchase plans using a credit card will be available until 12/11/2014.

I found it very interesting the wording in the email from Loyal3  "In order to put an end to the "gaming" of LOYAL3, and to maintain fee-free investing, on Tuesday, 11/18/2014, we will be removing credit and debit cards from the LOYAL3 platform. Automatic Monthly Plans (monthly recurring investments) using credit and debit cards will continue to be active until Thursday, 12/11/2014, to allow time to switch over to ACH (checking account transfers)."  Apparently, I'm one of those people "gaming"  Loyal3.

This is a big disappointment for me as I have been doing a significant amount of manufactured spending with Loyal3 over the past 4 months. So far I have purchased and sold more than $40,000 worth of stocks on Loyal3. All of the purchases were made using my Barclays Arrival Plus Mastercard which gives 2.22% back in points to be redeemed for travel related purchases. All together I have earned more than $888 in points from Loyal3 as well as very modest amount of capital gains totaling $177.

Through the process I had the Loyal3 account in my name shutdown because of my selling off the stocks too frequently. I am currently using an account under my partners name with a Barclays Arrival Plus Mastercard authorized user card.

Although the email from Loyal3 says that credit and debit cards will be removed from the Loyal3 platform on 11/18/2014, my understanding is that you will still be able to use a credit card to purchase stocks on Loyal3 until 12/11/2014 when automatic investment plans are also unable to use credit cards. You can do this by simply setting up an automatic investment plan to buy $50 worth of stock for today. Then go in a few days later and change the automatic investment plan to that day which will initiate another purchase. You can continue doing this with as many stocks as you want. 

The limitation is that you will only be able to make one $50 purchase of a single stock per day. That means only $50 of Google, $50 of Amazon, $50 of Walmart… I frequently purchase $200 of an individual stock per day by doing 4 different $50 purchases. I guess I will just have to branch out from the 10 stocks that I am currently purchasing.

I have found Loyal3 to be the easiest method of manufactured spending that is currently available. This method also comes with a certain amount of risk, but also reward. In my case I have made $177 in capital gains. I also could have lost $177. Last month when the stock market was experiencing a lot of volatility my portfolio dropped by about 4%. I was forced to hold onto stocks longer that I normally do at the same time I was purchasing more stocks. At one points I had more than $13,000 tide up in Loyal3. This is a lot of money to float. I held of selling any stocks until the values climbed back up.

The only stock that I have that is still down significantly is Discovery. My original $800 investment in Discovery is down more than $100. My total capital gains of $177 includes the cost basis loss of $100 in discovery. If it wasn’t for the Discovery stock my capital gains would be $277.

Deals come and go. The use of credit cards on Loyal3 is coming to an end in a little more than a month. If you need to make some minimum spending with Loyal3, get started soon!