Loyal3, a possible way to manufacture spend

We received an email from a longtime reader, Harry Campbell, author of the blog yourpfpro, who wrote to us concerning an interesting website for manufacturing spend. Here is his article concerning the subject. It concerns an online brokerage website called Loyal3, where the main draw is the ability to trade stocks for free, with a few caveats. His article covers the the pros and cons of the website nicely.


The positives involve free trades, buying fractional shares, and funding it with a credit card; the main con is that the trades are not real time, but happen sometime over a 1-2 day period, which means you can’t really time the . However, the main excitement about this website involves the ability to fund it with a credit card!


Loyal3 now gives you the ability to buy up to 53 stocks, mostly large-cap companies like Amazon, Walmart, and McDonald’s. You can, “fund up to $2,500 per stock using a credit card and there appears to be no monthly limit(other than the 53 stocks x $2,500)”, so that equals $132,500 of potential credit card spend. And there doesn’t seem to be a time limit on holding the stocks, so you could potentially buy the stock, hold it a day or two, however long it takes the purchase to happen, then immediately sell it.

If you’re wondering how they can make money while executing free trades, so was I. It seems there well venture-funded, they have some “agreements” with the companies in which they trade, and instead of real-time trading, and they use batch trading.

I gave up trading individual stocks a couple years ago, and now just utilize Betterment for all my stock needs, and also I have completed a massive amount of signup bonus spend this year already, and am not in the market for new credit cards for a while. So I don’t think I will be taking advantage of this website for now. However I’d love to hear your thoughts on this opportunity to manufacture a potentially huge amount of points!


  1. This sounds like a terrible idea – 1-2 days for the trade can cost you a lot more than $9.99 for the trade and 2% rewards on your credit card…THAT’s how they make money!

    1. I agree, this is not good for manufactured spend. Price fluctuations before order execution will likely end up costing you.

  2. It depends on what execution price they give you. If they’re deliberately giving you the highest price when buying and lowest when selling then that’s obviously how they’re making their margin and it would probably be detrimental to use them. If on the other hand they’re doing the 1-2 days just to get the batch pricing and they give you average execution price, then that’s probably not a big deal at all, especially for small-lot traders where a $10 commission is real money.

    I’m going to comb the terms a little more closely because it’s a pretty interesting manufactured spend possibility.

  3. I’ve been doing some research lately on stock trading and thought I’d just add that you should ask your broker if they use IEX. IEX has created a platform that bypasses the HFT (High Frequency Trading) platforms that skim money off your trades. More on that here http://www.iextrading.com/

  4. @everyone – I agree this isn’t the best idea for short term manufactured spending, that’s why I said I wouldn’t be doing it. I just try to give you some new info. However, it might be worth while to spend a certain amount each month, if you want some exposure to larger stocks, so you can dollar-cost average over the course of a year.

  5. Thanks for the shout out. It’s easy to dismiss Loyal3 but there aren’t a whole lot of options out there right now. I don’t have time to hunt down VR’s at random gas stations 🙂

    I’m working on a follow up article but basically I did a little test run. Studies have shown that you can eliminate a lot of the diversification risk with 10-18 stocks (there’s some debate over this) so I bought $10 worth of the 10 lowest beta(volatility measure) stocks and cashed them out after a couple days(I could have done it sooner but didn’t want to set off any red flags). The market had a HORRIBLE week and I lost 2% when I sold.

    Now let’s say that spend was the difference between me being able to apply for a second Citi AA Executive Card at 100,000 points. Would it be worth it for you to take a 2% loss on $10,000 in spend to get 100,000 points?

    Obviously it’s risky but depending on your situation, I think Loyal3 could be used as short or long term.strategy.

  6. I gave this a try last month in order to meet the spend requirement for AA Executive Advantage MasterCard with 100K Miles Bonus. All and all it went probably as well could be expected. Bought $2,500 in Apple, Berkshire Hathaway, Amazon, and Monster. I purchased on Monday, and my order was not executed until Thursday. I am not going to get to into the numbers, but I finally sold on Friday and order was executed the following Tuesday, and cash was transfered back to my back account on Thursday. I had $9,976.88 returned to my account. I probably won’t do it again just because of the potential risk involved. In this case the juice was definitely worth the squeeze, and it a good manufacture spend for smaller amounts especially if you wouldn’t mind holding the stock.

  7. Have been using Loyal3 for a bit and it’s been great. Unfortunately I received an email yesterday stating that they will not allow credit card purchases for one-time (i.e. $2,500/trade) stock purchases. So from a MS spend perspective, this is probably dead. But it was good while it lasted.

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