#adigitalblogger #stockmarketindia #creditcard
Can I Buy Shares With Credit Card?
In the financial year 2021, nearly 62 million credit cards were in use in India. And of the total credit card defaults for public sectors banks stood at 12.7% of the net defaults.
Investments as we all know are subject to market risks and volatility. The returns are not guaranteed and there are chances of loss too.
therefore mixing these two is like making a poisonous cocktail. SEBI has strictly banned the use of credit cards for all sorts of investment purposes. The simple reasons are:
Unlike the insurance sector where you can pay using credit cards, the stock market as an asset class is highly dynamic and volatile, therefore no credit card company in their right mind will make it available for investing or trading.
A general principle of investing, followed by the likes of Warren Buffet big investors is, that Investment should always be done using the surplus amount you have from your income so that in case of a loss you don’t end up in a debt. You should never borrow to invest.
But then how will small-time traders flourish in the market without credit, that is why the idea of margin(cough #SEBIBringMarginBack) exists, where brokers act as banks for giving out loans or credits for trading.
You can always withdraw money using your credit card and deposit the same in the bank and trade in stocks. but that should be avoided as well.
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