How to use a credit card for investment

Did you know that many wealthy people in Indonesia still have debt? And we’re not talking about small amounts — some owe billions of rupiah. But don’t get it twisted, they’re not racking up debt just to buy snacks. These wealthy individuals often take on debt to invest, such as acquiring other companies or buying property in premium areas to build boarding houses.

You can also use debt or loans for investment just like they do. One type of loan you can use for investing is a credit card. Want to know how? Let’s go through it together.

1. Choose a credit card with low interest and fees

When building a business or portfolio investments like stocks or bonds, there are generally two types of funding you can use: your own capital (bootstrapping) or loans (credit). Each has different risks and costs. The cost or risk that business owners must bear when accessing capital is called the cost of capital.

The cost of capital from bank loans or credit cards comes in the form of interest and fees. That’s why it is important to choose a credit card with low interest rates and low fees for investment purposes. Because the lower these are, the cheaper your cost of capital will be.

2. Make sure your investment return is higher than the interest and fees

The second step in using a credit card for investing is to pick an investment instrument that offers a return higher than the interest rate on your credit card.

For example, let’s say you use an Honest Credit Card to buy one lot (100 shares) of INDF stock at Rp6,700 per share (total loan Rp670,000) on September 4, 2024. Then, for some reason, you forget to pay the bill in full by October 4, 2024, so you get charged 1.75 percent interest for the month. Between September 4 and October 25, 2024, INDF stock rises by 12.3 percent from Rp6,700 to Rp7,525 per share. The profit you make would be:

Gross profit = 12.3 percent of Rp752,500 minus 1.75 percent of Rp670,000 = Rp92,557 minus Rp11,725 = Rp80,832

Note that this profit does not yet include admin and transaction fees from the stock platform.

3. Pay your bills on time

Want to maximize your investment gains? Then pay off your credit card bill in full and on time so you avoid interest charges. In the example above, if you didn’t miss the payment, you would have made a profit of Rp92,557, only reduced by stock transaction fees.

Not only that, paying your credit card bill on time also improves your credit score. A good credit score makes it easier for you to access other types of bank loans and to get a higher credit limit. With a credit limit of Rp100 million like Honest Card offers, you’ll have more flexibility to access a wider range of investment opportunities.

4. Use your credit card for business purposes

Credit cards have many uses, especially those with international payment networks like Mastercard. With a card like this, you can easily purchase materials or products for your business from abroad.

For instance, if you want to stock up on inventory from Amazon or eBay, all you need to do is enter your credit card number and CVV or CVC code to complete the payment internationally.

But keep in mind that you should monitor your potential business returns. Unlike portfolio investments like stocks, investing in a business can come with more unpredictable profit margins.

5. Take advantage of discounts and cashback

One of the benefits of using a credit card instead of a debit card is access to more discounts and cashback. With these promotions, you can save money and use the savings for something more productive.

For example, say you book a hotel in Singapore through Booking.com. The usual price is Rp1,000,000 per night, but you get a 30 percent discount, so you only pay Rp667,000. Instead of spending the leftover Rp333,000 on shopping, you could use it to buy one lot of stock and earn additional returns.

On top of that, Honest is currently running the Cashback Jujur program, where you can earn 5 percent cashback up to Rp4 million for all transactions at any merchant between April 1 and May 31, 2025. The more you use your Honest Card during this period, the more cashback you’ll collect. You’ll feel the savings instantly and can reinvest that money toward your financial goals.

Using borrowed funds for investing can help your business grow faster. But remember, investing with borrowed money carries higher risk than using idle or excess funds. Reduce your investment risk by paying your credit card bills on time and in full, and keep a close eye on the performance of your chosen investment instruments.