Is Stash Stock Back Card a scam? Is the Stash Stock Back Card safe? Is the whole Stock Cash Back Card legit? We take a look.
What Is Stash?
Stash is one of many micro-brokers pushing the so-called fintech movement. We should start by asking is Stash a legitimate company?
Stash is backed by numerous well known investors, and all of its customer accounts are SPIC insured which means even if you still wonder, is stash reputable, you can be assured that your money is safe in separate, insured accounts.
Like other mini-brokers, Stash is entirely online and offers customers ways to buy stock without investing a lot of money and with minimal fees. The Stash Stock Back Card is a compliment to the online Stash brokerage service, and other Stash cash back rewards.
What Is Stach Stock Back?
Stash Stock Back comes from Stash stock rewards, Stash stock back bonus, and the Stash Stock Back Card. In each case, Stash deposits additional money into your Stash account in the form of stock shares and partial stock shares known as fractional stock shares.
Alright, these are a lot of terms that all start with Stash Stock, so let’s break them down in a miniature Stash review.
Stack Stock Rewards are earned whenever you use your Stash Stock Back card.
How Does Stash Stock Back Work?
When you use your Stash Stock Back Visa Card, Stash will credit your account with a small amount of stock in the shares of the company you made the purchase at. So, if you eat at McDonalds, and use your Stash Stock Rewards card, Stash will give you a small amount of McDonalds stock. In most cases, the Stash Stock Back reward amount is 0.125% of your purchase price. If you spend $10 at McDonalds, you get $0.013 worth of McDonalds stock. Obviously, this is a tiny amount. A penny worth of McDonalds stock isn’t much. Is doesn’t really make Stash Stock Back worth it for a single purchase.
The amounts can add up over time, but they will do so slowly. Another auto-investing service called Acorns invests small amount of change by rounding up your purchases into an investment portfolio. Both require a lot of time, and a lot of purchases for the money to add up to anything more than spare change.
Even on larger purchases, the Stash Stock Back reward isn’t a lot. A $250 purchase at Home Depot would earn you just 31 cents worth of Home Depot Stock.
If you buy something from a merchant that doesn’t have an eligible stock, then Stash will reward you with 0.125% of a default stock of your choosing.
What Is a Stash Stock Back Bonus?
Each month, Stash picks a few companies for a stock back bonus. These Stash stock back bonus are worth it. For example, in the month of April purchases with Netflix, Hulu, Disney+, and Spotify have a 2% stock back bonus. So, your $7.99 Disney+ subscription turns into 16 cents worth of Disney stock instead of one-cent of Disney+ stock.
Although Stash Stock Back bonuses have been with several different companies, including 3% at Dicks Sporting Goods and 4% at Footlocker, the Stash Stock Back Bonus has been repeating in these same for media subscription companies as April since February 1st.
In the past some of the bigger Stock Back Bonuses were only available to people with the Stash+ plan which costs $9 per month instead of the $1 per month for the base plan. Obviously, upgrading to a service that costs $8 more every month to earn 5% at one retailer for one month is obviously not worth it.
Is Stash Stock Back a Good Idea?
The theory is that your stock back rewards would add up over a long period of time, but other than convivence, Stash Stock Back is a bad idea in most every way. A good cash back card pays at least 1% of each purchase. If you took that 1% and bought fractional shares with Stash you would come out way ahead of taking the pennies you receive from the Stash Stock Back card.
Instead of spending $250 at Home Depot and getting 31 cents worth of Home Depot stock, you could use something like the Chase Freedom Unlimited card and earn 1.5% cash back, or $3.75 on that same $250 Home Depot purchase. You could then redeem that $3.75 and use it to buy $3.75 of Home Depot stock yourself on Stash, or another micro-broker. That’s a 120% return by using a different card vs the stock back reward.
And, that McDonalds purchase? It earns 3% on that same card, so instead of one cent worth of McDonalds stock, that $10 purchase earns you 30 times as much, which you can use to buy McDonalds stock.
So, what is the value of the Stash Stock Back rewards card? Convivence.
If you use another cash back card, you have to manually buy whatever stocks you wanted instead of Stash automatically putting tiny amount of them into your stock portfolio.
Since the amounts are so tiny, it really doesn’t matter how they are invested, but theoretically, the Stash Stock Back card would create a portfolio that tilts heavily toward consumer retailers. After all, that is where you would use a debit card to spend money most frequently.
In the end, the Stash Stock Back rewards program is a nice little gimmick, but with the tiny amounts involved, there are certainly better ways to generate savings and investing. Continuous investing and compound interest are indeed the way to build wealth, but it takes money to make money, and there just isn’t enough money here.