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!

Update: Using Loyal3 to Make Money and Meet Minimum Spending Requirments

[Update: Loyal3 has ended the use of credit cards to purchase stocks therefore making the us of Loyal3 uselsess for miles and points enthusiasts] I have posted before about the opportunity that Loyal3 offers to manufactured spending enthusiasts. My earlier post: How to Meet Minimum Spending Requirements with Loyal3 gave details on how to use Loyal3 to meet minimum spending requirements.

As a recap, Loyal3 lets you buy a limited selection of stocks for a maximum of $50 at one time (fractional shares) for no fees and lets you use a credit card. What's the catch? Loyal3 has two business days before it has to initiate the purchase meaning you do not know what price you will buy in at. Also, when you choose to sell your stock the sale will go through by the market close of the day you initiate the sale which means you won't know exactly what your stocks will sell for.

I have been playing around with earning miles from Loyal3 over the past two months. So far I have had great success using Loyal3 for manufactured spending. To date I have manufactured more than $20,000 in spending through Loyal3. Not only have I gained the valuable rewards from my credit card, but I have also managed to turn a small profit on the buying and selling of the stocks. These profits are very small. For the $20,000 of stocks that I have bought and sold, I have made approximately $90 in profits.

I have used my Barclays Arrival Plus World MasterCard exclusively for all of my purchases on Loyal3. This credit card gives a return of 2.22% back to be used for travel related purchases. This means that my $20,000 in manufactured spending on Loyal3 earned me $444.44 in travel rewards plus another $90 in short term capital gains. All this in less than two months.

I must add in that I am not a professional investment adviser. Proceed at your own risk. It is possible to lose money in the stock market.

I will share a little more about how I am doing this. First, my strategy has been to buy in for $5,000 per week at $1,000 per weekday. I need to select at least 10 different stocks. This is because there is a $2,500 maximum purchase of each stock per month. If I buy $100 of a stock each weekday for a whole month I will purchase around $2,200 per month of an individual stock. You run the risk of getting your account audited if you accidentally try to purchase more the $2,500 of an individual stock in a one month period.

Purchasing $1,000 per day requires 20 purchase transactions at $50 each. When I do this manually it takes me about 13 minutes every day.

Tip: Want to save yourself some time. Check out iMacros for Firefox. This add on allows to to record and replay repetitious browser tasks. That's what I'm using.

I try to sell frequently. My strategy has been to track all of the stocks that I have purchased with the portfolio tracker with Google Finance. Every weekday I look to see which stocks are up for the day. I sell the stocks that have made small gains more than the price I paid for the stock with Loyal3. Some sales I might only gain $1.00 on $500 worth of stock.

There is some lead time when using Loyal3.  For me there is generally a 10 day period from the time of purchase to the time the money form the sale makes it to my checking account. For each step in the process it takes time:

• Purchase stock - 2 business days until stock is purchased posted to your account
• Sell Stock - 3 business days until the sale is finalized and funds are available in your Loyal3 account
• Transfer Funds form Loyal3 to your bank account. Most funds transfers can take up to 3 days to complete

With these time restrictions, it is not possible to cycle through the process within one week so a weekend will be included. This makes for some delays.

When I use my Barclays Arrival Plus World MasterCard I get 2.22% back for travel related purchases. If I invest $5,000 per week and $20,000 per month, getting 2.22% return each week this comes out to a great return of 8.88% per month.

With an expectation of an 8.88% monthly return there is really no reason to want to hold on to any of the stocks. I doubt there are any stocks analysts predicting any stocks to make an 8.88% return per month.

You need to be careful though or you run the risk of getting your account shutdown. Here are some reason that may lead to your account being shut down:

• Changing credit cards frequently for purchases
• Attempting to purchase more than the maximum of $2,500 per stock per month
• Selling stocks with no regard for profits and losses
• Selling stocks too quickly (I try to hold onto the stocks for at least two days)

Also be aware that starting out by purchasing $1,000 in stocks (that means 20 $50 transactions) with Loyal3 may initiate a fraud alert with your credit card. Start slowly.

If you have any questions or comments, feel free to leave them below.

How to get a 55 Day Interest Free Loan

I have been doing some research recently with the best ways to get low interest money for borrowing needs.
Studies show that 39% of Americans do not pay off their credit cards every month. This means they are subject to the very high interest rates on most credit cards some as high as 29%. With the average credit card debt for US adults at $4,878 there is a lot of interest being paid to credit card companies.

Some people in need of quick cash pawn something, probably not the best idea. This can carry significant interest rates. Some people take out cash advances on credit cards. Also not a good idea. Not only are there up front fees, but the interest starts accruing immediately often at rates of 29% per year.

If you are need of temporary loan, this is possible through your credit card. It is possible to get an interest free loan for 55 days. How does this work? Every credit card has a billing period which is generally 30 days. After the billing period is the grace period which is usually 25 days. If you were to make a large purchase or use other techniques to get cash from your credit card on the very first day of the billing period, you could have an interest free loan for 55 days.

Even though you would officially get the loan for 55 day interest free, it can take several days to get the money into your bank account. Planning for 50 days is a safer option.

I am not recommending that anyone just go out and do this, but there may be circumstances where this is the best option. I remember when I was a sophomore in college. I was poor and broke. I once took a $500 cash advance on a credit card from an ATM. What's even worse is that this was a credit card that I had a balance on that was not paid off at the end of the month. At the time I did not completely understand exactly how much I was paying, but I likely paid over $150 to borrow $500 by the time I paid off the credit card balance. Remember that if you take a cash advance there are usually up front fees as well as high interest rates that start accruing immediately. There is no 25 day grace period. Also, you pay off the lowest interest borrowing first when you pay your bill. This means that if you already have a balance for other purchases, you will not pay off the cash advance until all of the other credit card debit is paid off first. This can get you into trouble quickly. I just want people to be aware of how this works and do NOT take a cash advance on a credit card.

There are other much less costly methods for getting access to cash quickly.

If you need cash for something like rent that you cannot pay with a credit card directly you can use Amazon Payments to transfer up to $1,000 per month to another person with a credit card for no fees. See my previous post: How to Meet Minimum Spending Requirements for Credit Cards - Amazon Payments  for more information.

You can also use the method outlined in this post: How to Meet Minimum Spending on Credit Cards - Debit Gift Cards to Money Orders. This method will incur an upfront fee that varies depending on the fees for the $500 gift cards. A $5.95 fee is 1.2% fee on $500. If you need to get access to more than $1,000 cash.

It is easy to figure out when the first day of your billing period begins. Just look at your past credit card statement, and it will show the billing period as well as the due date. This will be the same days every month.

I am planning on testing out the benefits of this 55 day interest free loan with Loyal3. I wrote about how to use Loyal3 to make minimum spend requirements. You can check that out here. I am going to test out how much money I can push through Loyal3 in a 55 day period by buying stocks with a credit card for no fee, then selling those stocks. Churn, repeat. I will let you know the results when I finish my experiment.

If you have any questions or comments, please comment away!

How to Meet Minimum Spending on Credit Cards with Loyal3

Using Loyal3 to manufacture spend comes with some risk, but I have been churning credit card transactions with this method successfully for a profit for the last several months.

This is the fourth post on how to meet minimum spending requirements for credit cards. For links to my other posts on the subject see below.

How to Meet Minimum Spending Requirements for Credit Cards - Amazon Payments

How to Meet Minimum Spending on Credit Cards - Debit Gift Cards to Money Orders

How to Meet Minimum Spending on Credit Cards - Bluebird

Loyal3 is stock broker where you can buy a limited number of brand name stocks for no fees using a credit card. Loyal3 is able to do this because they batch process all of the stock orders received for the day into one order. So your stock purchase order will be combined with all of the other Loyal3 investors that want to purchase a particular stock on that day. The downside is that you do not get to pick the price that you buy the stock for. If you submit your purchase order before 2 PM EST, your stock purchase will be processed by the end of market close on that day.

There are only a limited selection of stocks available for purchase. My favorites to purchase are Google, Intel, Apple, Walmart, Berkshire Hathaway, and Microsoft. These are high volume stocks that tend to be very stable meaning the stock price does not vary much.

Most brokers charge fees from $4 to $12 per stock trade. This makes buying stock for the purpose of manufacturing spending not worthwhile. Also, you are not able to buy stocks with a credit card at any stock broker.

Loyal3 charges no fees to buy or sell stocks. Their website is very user friendly and easy to navigate. If you want to buy stocks with a credit card, you are limited to $50 per transaction. This means that you will be buying fractional stock shares. My method is to select my favorite stocks and buy $50 at a time with a credit card. You can buy multiple times at $50 for the same stock. You just need to wait a few minutes between purchases or the website or it will think that it is a duplicate purchase. There is a maximum of $2,500 purchase for each stock in a month which not too many of us will be concerned with. You are reducing the risk by purchasing several stocks rather than just one or two.

This Flyertalk thread has a wealth of information on using Loyal3 for manufactured spending. Follow the link for more info on Loyal3.

These were my results with my last three batches of buying and selling with Loyal3. I bought $1550 worth of various stocks over a seven day period. I then sold all of the stocks on the same day. I bought the stocks with my Barclays Arrival Plus World Mastercard which give me 2.22% back on all purchase redeemed for travel. I received $34.41 in travel credit for the purchase with my credit card. When the stocks sold I received $1546.62 which means I sold my stocks for a loss of $3.38. My travel credit of $34.41 - $3.38 in stock loss = $31.03 profit or a 2% profit in little more than a week.

For my next batch of purchases I bought $2,300 in various stocks over a 10 day period. I sold all of the stocks on the same day for $2,326.80. So I made a $26.80 profit from selling the stocks plus the 2.22% for another $51.06 for a total profit of $77.86 or 3.39% in less than 2 weeks.

My third batch of purchases included $2,450 worth of stock purchased over seven days. I sold all of the stock on the same day for $2,449.38 or a $0.62 loss. With the 2.22% that I made from my Barclays Arrival Plus World Mastercard I made $54.39 - $0.62 = $53.77 in profit or slightly more than 2%.

There are some delays. After buying your stocks it can take two business days before they show up in your account. When you sell your stocks it will take at least 3 business days before the sale is finalized and the funds are available to transfer to your bank account. Once the funds are available, it will take another 3 business days for the funds to be deposited into your bank account.

As I said before, this method is not without risk just as any stock purchase has inherent risk. If some of the stocks you purchase drop in price after you buy them you can hold on to them until the price goes up if you are able to float the cash. Buying a variety, say five different stocks can help reduce your risk. One or two stocks may drop in price, but some of the others will likely increase in price evening out any losses.

This can be an easy way to meet minimum spending requirements for your credit card and even make a profit in the process.

If you have any questions or comments, I am always happy to hear from readers!