Last updated: 23/07/2020 | Estimated Reading Time: 5 minutes
A guide to stoozing
Did you know that you can use a combination of a credit card with a 0% interest introductory period and a high interest savings account to turn a profit in a process known as ‘stoozing’?
We’ll explain what this involves and how you could stooze to make money from credit cards.
In This Guide:
What is stoozing?
There are several credit cards available that offer introductory bonuses of 0% APR for a set period of time.
Stoozing involves treating these cards as interest free loans and invested the borrowed capital in a high interest savings account. If you then pay off the credit card in full before the 0% introductory period is over, you will have made a profit to the sum of the interest earned on your savings.
As long as you make sure that all of the figures are balanced, and that you pay off the balance of the card in time, then by stoozing you can effectively print money.
Making money by stoozing
The idea behind stoozing is pretty straightforward, but in practise there are a few different ways to get the results you want.
Simple stoozing is the easiest way and basically involves taking advantage of a 0% interest period on a credit card to allow you to use any cash you already have to earn interest and spend simultaneously.
It is essentially a way of having your financial cake and eating it.
The first thing you’ll need to do will be to find the best high interest savings account, and a credit card with the longest 0% interest introductory period that you can get your hands on.
You should then spend as much as possible, or rather as much as you can afford to, on the card, and deposit the cash you’d have spent otherwise into the savings account. You need to make sure that the amount you spend on your credit card is equal to the amount you deposit in the savings account.
Then simply, when the 0% introductory period is over, pay off the balance on the credit card, and any interest that you earn on your savings during this period is pure profit.
So for example:
- Say you borrowed £1,500 on a credit card with a 24 month introductory 0% interest period, and then deposited the same amount into a savings account offering 4% interest.
- By the time the 0% period is up, you pay back the £1,500, but you would have earned £120 in interest from your savings account. This £120 is pure profit and of course, the more you stooze, the more you’ll make.
Advanced stoozing works on the same principles but involves balancing more different cards so that you don’t actually have to put up any capital yourself to begin with.
You’ll need a money transfer credit card and a 0% balance transfer card, as well as a high interest savings account or other form of investment.
The process goes like this:
- You use the money transfer card to deposit into your high interest savings account. You then transfer the debt from this card onto a 0% balance transfer card.
- Then, once the 0% period ends on the money transfer card, pay both this and the balance transfer card off, and enjoy the profits made from interest earned on the balance of your savings account.
- You can do this with multiple cards, increasing your ‘stoozepot’, but the more cards you have (and therefore the more unsecured debt you have), the more careful you’ll need to be in order to guarantee profit and avoid losses.
If done correctly, stoozing is a great way of making a bit of extra money without really doing anything once you've set all of the cards and accounts up. Indeed some have been reported to have made thousands of pounds through these and similar methods.
But there are a few things you need to be careful of if you want to make sure you profit.
Most importantly, and this is particularly important if you're balancing cards, don't get the different cards you have mixed up. Don't make purchases using your money transfer card, and vice versa, as the rates attached to each card will be very different.
You should also make sure that you close each card you use once you've made your money. This will serve to maintain your credit rating. A good credit rating is crucial, particularly for advanced, card balancing stoozing, if you want to enjoy the best rates available and maximise your stoozing profits.
Other ways of avoiding interest
If you don’t fancy stoozing but are still set on avoiding interest payments on your credit cards, then don’t worry; there are other options available that won’t turn you a profit but will save you money.
Standard balance transfer cards are a great way of doing this, allowing you to transfer debt from an existing card and put off paying any interest for a certain period of up to a few years.
Compare these, and all of the other kinds of cards you’ll need if you want to stooze, by heading over to our credit card comparison page. We compare cards of various types from various different providers so you can be sure that you’ll get what you need and best of all, it’s totally free.
Please note: Stoozing requires very tight management of your personal finances take care to calculate what you can afford before entering into any such arrangement.