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Getting a loan to day trade (but not to day trade)
- Thread starter Sky123987
- Start date
I did something similar to start my trading account initially except instead of just getting a loan I used those credit card convenience check thingies. I started several years ago and had been playing around with simple debit and credit index spread strategies. After I traded them for about 6 months in paper trading and felt comfortable with the risk and averaged about 15% for the 6 month period I was ready.
I went ahead and took out about 30K in convenience check debt over 4 different credit cards that had an interest rate of 3.99% fixed for life. All I had to do was make more than 3.99% and a little more to cover the taxes on my stock gains and that covered my interest cost.
.....I figured if I can't make at least 3.99% per year then I don't need to be trading anyway.
Long story short, I paid off the rest of the debt last year and have been making about 30% a year return so for me the convenience check thing was a no brainer.
I'm not sure if you need a really high fico score for this or not and if the credit card companies still do these offers considering the current credit environment but it's definitely worth a look.
I went ahead and took out about 30K in convenience check debt over 4 different credit cards that had an interest rate of 3.99% fixed for life. All I had to do was make more than 3.99% and a little more to cover the taxes on my stock gains and that covered my interest cost.
.....I figured if I can't make at least 3.99% per year then I don't need to be trading anyway.
Long story short, I paid off the rest of the debt last year and have been making about 30% a year return so for me the convenience check thing was a no brainer.
I'm not sure if you need a really high fico score for this or not and if the credit card companies still do these offers considering the current credit environment but it's definitely worth a look.
Quote from EPrado:
Pay it back ? Well I had not planned on it. Figured you could write me off in a year or so. Everyone is doin it.
Have not been on here that much....mucho busy. Plus it's kinda boring without Sykes or Seben around. Surf even isnt as entertaining.
LOL yeah no prob, I just mailed you a check. Thanks for emailing me your stated income so quickly. Don't really have time to verify it, but no big deal.
Yeah I have been having to keep myself mostly occupied with low level vendor types. They're fun and all, but mostly the same script over and over again. Timmay was...different. Much more exciting. Not to mention Seben. That was a blast man.
Quote from huh:
I went ahead and took out about 30K in convenience check debt over 4 different credit cards that had an interest rate of 3.99% fixed for life. All I had to do was make more than 3.99% and a little more to cover the taxes on my stock gains and that covered my interest cost.
I haven't seen a "cash advance" rate of 3.99 percent in my life. How did you manage that?
Quote from HolyGrail:
I haven't seen a "cash advance" rate of 3.99 percent in my life. How did you manage that?
I took all this out back in 2003 when fed rate was really low and it seemed like I was getting a ton of these offers. I opened up an american express, visa, a couple mastercards. It was AWESOME. It was 3.99 fixed until the balance is paid off, there was a 1 time 3% fee but it was capped at $75 which is nothing when you're borrowing 10K on each card.
...Now I'm wishing I didn't pay that debt off cause man that was cheap debt oh well. I still get the 0% for 12 month things which I take advantage of.....but I would not recommend doing this unless you are very very very confident in your trading strategy and make sure to pay the debt off or transfer it in time.
Quote from HolyGrail:
That's an incredible deal and I must admit I would be willing to take the trading risk at those rates.
Yeah I've really found no use for paying margin interest to my broker since I've had no issue raising a decent chunk of capital. I've got about 7 or 8 credit cards now and pretty much at any given time at least one is offering 0% for 12 months so I can just simply move the debt from one to the other. I don't pay much interest and have access to over 30-40K almost whenever I want.
Of course the downside is that this will hurt your FICO score if you take out all this debt but you can usually explain it to the lender. I bought my house about 3 years ago and at the time I was still showing about 25K in credit card debt which made the lender nervous but once I showed him all my documentation and he saw that I had over 30K in my brokerage account and I explained what I'd done they didn't really care.
Again I'm a small time investor, I"m happy with managing a 40K trading account so this credit card thing works for me when I want to raise cash for something. So my advice to people is to sometimes go ahead and take a look at those credit card offers because you can find some good deals. I know a lot of people get in trouble with credit cards, but if you're smart you can score some awesome deals!
Quote from huh:
Yeah I've really found no use for paying margin interest to my broker since I've had no issue raising a decent chunk of capital. I've got about 7 or 8 credit cards now and pretty much at any given time at least one is offering 0% for 12 months so I can just simply move the debt from one to the other. I don't pay much interest and have access to over 30-40K almost whenever I want.
Of course the downside is that this will hurt your FICO score if you take out all this debt but you can usually explain it to the lender. I bought my house about 3 years ago and at the time I was still showing about 25K in credit card debt which made the lender nervous but once I showed him all my documentation and he saw that I had over 30K in my brokerage account and I explained what I'd done they didn't really care.
Again I'm a small time investor, I"m happy with managing a 40K trading account so this credit card thing works for me when I want to raise cash for something. So my advice to people is to sometimes go ahead and take a look at those credit card offers because you can find some good deals. I know a lot of people get in trouble with credit cards, but if you're smart you can score some awesome deals!
There is a way to get even around that problem as well.