The SEC has issued an investor alert to warn investors of the dangers and risks of using credit cards to purchase or fund investment accounts.
According to the SEC, investors should understand that most licensed and registered investment firms do not allow their customers to use credit cards to buy investments or to fund an investment account. The SEC urges investors to work only with a licensed or registered investment professional or firm.
Aside from the traditional credit card risks such as high interest rates, fraud, transaction fees, and damaging your credit score there are other factors to consider which the SEC describes below:
Issues with Withdrawals. Credit card investment scammers often use delay tactics when you attempt to withdraw your money from the fraudulent investment. These scammers will often hold up your withdrawal request from an investment account until it is too late for you to dispute the charge(s) with your credit card company.
Third-Party Payment Processors. If you make an investment using your credit card through a third-party wallet service or payment processor, you may have limited recovery options because these entities may be unregulated or operating unlawfully.
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