Are You Ready to Earn Miles for Stock Purchases?

The Wall Street Journal carried a piece (Google “Are You Ready to Buy Stocks at Your Grocery Store?” if you need access to the original) on new gift cards that will be sold in grocery stores and office supply stores that let you purchase stock.

That means you’ll be able to buy stocks — which of course can be easily sold — conveniently, with a credit card, at retail outlets.

In a new twist on the bustling gift-card business, retailers such as Kmart and Office Depot this week are starting to roll out cards that give the recipients small amounts of stock in some of the country’s best-known companies. The cards will be available ahead of the holiday shopping season at other retailers, including Safeway Inc., Toys “R” Us and Lowe’s Cos.

They’ll be selling shares of 20 companies, “including Coca-Cola Co., Facebook Inc., Apple Inc. and Berkshire Hathaway Inc., as well as products that follow the S&P 500 index and precious metals such as gold and silver.”

The cards come in $25, $50 and $100 denominations. Cards cost $4.95 for a $25 card. No price is mentioned for the $100 card. If it’s the same, and if you’re earning 5 points per dollar on the transaction, this could be worth it.

Of course you bear risk in the value of the stock purchased falling between the time you buy and sell, and there will be a transaction fee for any sale. As a result this is unlikely to become a way that most will buy stocks or earn miles since the transaction fees are too high. One key to investing is not giving up your earnings in the form of fees.

This won’t be quite as useful as Loyal3 used to be.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Not that this would make a huge deal but I wonder if the $5 gift card fee could be tax deductible as part of the brokerage’s commission fee?

  2. My 401k is chock full of fees. I can’t do anything about then. Either accept them or not save for retirement. People in finance are leaches and scum (how is that for stereotyping 😉

    But seriously though people wanted to pitchfork finance people 6 years back and now nothing. Amazing country. Only takes throwing a few bones to distract Americans.

  3. Not sure how you think this could be worth it for the example you cited – $4.95 (equivalent of commission) for a $25 purchase of stock. That’s a 19.8% commission! You will need your stock to go up by 19.8% to break even!

    Now if you could buy $1000 of stock for $4.95 – that’s a different story.

  4. The article wasn’t in my print version but when did securities law change to allow purchases of investment products on revolving credit ?

  5. Toys “R” Us ….. I’d be very interested in the $100 version of this gift card if the fee isn’t outrageous. Toys “R” Us accepts Apple Pay combined w/ Discover = 22% cash back. Removes a bunch of risk in buying the stocks. Now that REDbird seems to have met it’s demise, this could be the next new thing until the end of 2015 when the Discover deal disappears. We should know very soon if GC’s payout the 22%.

  6. I am not sure how they are going to sell a fixed price card for a commodity that fluctuates in value by the second. Unless there is a central clearing house website where you go and redeem your stock gift cards and purchase the actual stock.

  7. The $4.95 fee doesn’t scare me, especially considering most of your online discount brokerages charge $7.95 and upwards. I’m curious what the max amount you can purchase would be. $500 or $1,000 of stock for $4.95 is not bad, especially if you’re getting points on top of that.

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