Revenge is sweet. And there's little sweeter than hitting back at credit card companies. This is my practical guide to ‘stoozing', how to legally make risk free cash. The gains can be £100s or £1,000s; to help you work it out there’s also an easy to use Stoozing Calculator.
This isn't a fly-by-night system. I first broadcast a strategy for this in early 2000, as 0% credit card interest rates began. Since then lots of people have made many £1,000s from doing so.
Use a card trick to beat the banker
The premise in a nutshell
Scores of cards lend new customers money at 0%. Borrow this money and then save it at as high a rate of interest as possible. Now you're earning interest on money they've lent you for free.
Who can do this?
Be credit card debt-free
Only use this technique if you don't have any credit card debts and have a decent credit score. Those who already have debts on plastic should use all available new credit to reduce the interest on current debt. Read the Best Balance Transfers article.
Ensure you're on the ball
Do it right and this is risk free. Yet stoozing isn't for the forgetful, undisciplined or inattentive. If that's you, stop reading now, as getting this wrong costs. Instead a less lucrative, but fool-proof, way to profit is simply using a cashback credit card, and paying it off in full every month (See Best Cashback Cards article).
STEP 1: Choose your method
The real choice here is which of the three ways to get the 0% debt onto the credit card is right for you.
- Easiest: The Simply Spend Method. By far the easiest to do and understand is the 'Simply Spend' method, which just involves moving your normal spending to a credit card.
- Most Powerful, but limited: The Super Balance Transfer Method. The 'Super Balance Transfer' method, is the quickest way to make cash, the big problem is it can only be used with a couple of cards.
- Complex & Wide Ranging: The Card Trick Method. The 'Card Trick' is by far the most difficult to understand, but it allows money to be quickly moved into a savings account from lots of different cards. Not for amateurs. You will also need to already own an Egg Money credit card (it's currently not accepting new customers).
Simply Spend: Use a 0% for spending card
How to do it
Get a card with a 0% offer for new purchases
Many cards offer new customers short term 0% offers on all purchases (don't confuse this with 0% Balance Transfers, which are for shifted debts). After acceptance, use the card for everything you buy; replacing all credit card, debit card, cheque and cash spending - though never for withdrawing cash as you'll be charged interest for that.
Only make minimum repayments
Don't try to repay this card, just set up a Direct Debit to make the minimum monthly repayments. As all spending is on the credit card, cash isn't being withdrawn from your current account, allowing unspent wages to build up. Thus the credit card debt will be matched by extra cash in your current account which can be moved to a high interest savings account..
Be disciplined
This isn't a way to spend more, it's a money making recipe. So don’t overspend and never go above the card’s credit limit.
The Top Cards
- The Top Card. 12 months 0% on purchases
The longest deal available is with Tesco's Clubcard Credit Card, which gives a big 12 months interest free on new borrowing, followed by 16.9% APR.
Spending with this also earns you 1 Tesco Clubcard point per £4 you spend. If these are redeemed for Tesco's 'Clubcard Rewards', then they're worth about 4p each. making this equivalent to a 1% cashback card. For more information, read Loyalty Schemes: How they work.
Quick Stats. 0% length: 12 months. Standard Rate: 16.9% APR. Minimum Income: N/A Min Repay: Greater of 3% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
- Next Best Cards. 10 months 0% on purchases
If you've already got a Tesco credit card, you'll need to apply for one from a different provider. The next best deals both give 10 months 0% on new borrowing, followed by 15.9% APR.
Sainsbury's* offers 10 months interest free on spending (12 months on Sainsburys goods), plus you get Nectar points when you use the card, although only 1 point for every £5 spent outside of Sainbury's. It also gives new cardholders 10 months 0% on balance transfers, for a 3% fee, which makes it the top 'All Rounder' card (read Balance Transfers for how this compares).
Equal in length is Marks & Spencer's credit card, plus here you also earn loyalty points to spend in Marks and Spencer stores.
Quick Stats
Sainsbury's . 0% length: 10 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of 2.25% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
M&S . 0% length: 10 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of 2.5% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
- The Best of the Rest. 9 months 0% on purchases
Behind this, Play.com's credit card gives 9 months 0% (then 15.9% APR), plus loyalty points, including 1500 Playpoints (worth £15) when you spend £150 in the first 90 days; read full details of this in Credit Card Freebies.
You can also get 9 months 0% from both Halifax* and Bank of Scotland* then 15.9% APR. Over 50s can get the Saga card which gives nine months 0%, followed by 11.9% APR.
Quick Stats
Play.com. 0% length: 9 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of £25 or £5 + charges Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
Halifax / Bank of Scotland. 0% length: 9 months. Standard Rate: 15.9% APR. Minimum Income: N/A Min Repay: Greater of 1% or £5 plus interest/fees Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
Saga. 0% length: 9 months. Standard Rate: 11.9% APR. Minimum Income: N/A Min Repay: Greater of 3% or £5 Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
Other 0% cards with cashback or rewards
To further up the gain, you can use 0% for purchases cards which pay cashback and those with sign-up freebies. However here the 0% will often be a little shorter, this option means you'll need to be a little more active.
The Bank of Ireland Moneyback credit card offers three months 0%, and pays you cash back for every purchase you make (read the full Cashback Cards article).
Heavy Sainsburys Spender?
Sainsbury's* credit cards offer 0% for for 12 months on and Sainsbury's purchases respectively, yet much shorter periods for spending elsewhere. This is worth it if you regularly shop in Sainsburys regularly, epsecially as it also gives you Nectar points.
Super Balance Transfer: Move cash straight to the bank
The dream stoozing aim is to instantly move all the 0% debt into a savings account; so you’re earning interest on it immediately. A few cards which offer what I call a ‘super balance transfer’ facility, allow you to do this.
What is a super balance transfer?
When you do a normal balance transfer on a new card, it pays off your debts on another credit card for you, so you now owe the new card the money. Yet with a super balance transfer it allows you to pay money straight into your bank account at the special cheap balance transfer interest rate.
Let me just clarify something; many cards allow you to pay cash into your bank account, the difference is most charge a fortune for it. The key to a super balance transfer is that you’re charged the special promotional interest rate.
Plus always set up a direct debit to make the minimum repayment each month. This way you will make as much money as possible, but never risk missing a payment, which would mean you're likely to lose the interest-free deal.
What cards will let you do this?
Two cards, currently allow this, yet always treble-check the details before making any payment, as terms and conditions can be changed at any time. So, to get this, never ever withdraw cash and never try and spend on the credit card. Instead, just ask the card provider to...
"Do a balance transfer to my current account"
- Virgin 0% for 16 months. Plus a 4% fee.
Currently, the Virgin* card offers 0% on 'super balance transfers' for 16 months for a one-off fee of 4% (higher than the standard 2.98% it charges for balance transfers). You can do the super balance transfer at any time within 60 days of opening the account.
Quick Stats. 0% length: 16 months. Fee: 4% APR: 18.6%. Minimum Income: N/A Min Repay: GREATER of £25 or £5 plus the interest Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
- MBNA Platinum 0% 13 Months. Plus a 4% fee.
The MBNA Platinum* will give you 0% on these transactions too, for 13 months, for a 4% fee. Here, you can do the 0% transfer at any time within 90 days of account opening.
Quick Stats. 0% length: 13 Months. Fee: 4% APR: 15.9%. Minimum Income: N/A Min Repay: GREATER of £25 or £5 plus the interest Anecdotal Info: Credit Limits: Mid. Ease of Acceptance: Mid
Once you have the cash in the bank, move it to a top paying ISA or savings account to earn up to 4%; see Step 2: Time to earn cash. When the year-long 0% rate ends, you could have netted over £100; then either pay back the balance in full, or switch it to a normal balance transfer card, thus keeping the stoozed cash in your savings account.
To find out how much you'll make, use the Stoozing Calculator.
This needs to be done carefully, read this through at least twice to be sure you understand it. The advantage of the technique is it gives you access to all the 0% cash immediately, rather than having to wait for it to build up, yet it's much easier to make a costly mistake.
Before starting, first you need to properly understand how balance transfers work. If you don't, please read Best Balance Transfers first (don't try this by simply ‘withdrawing cash' and putting it in your bank account; you'd incur fees and massive interest charges).
It's all about the Egg Money card
The cornerstone is the Egg Money hybrid credit card. You'll need to already own one of these cards, as it currently isn't accepting new customers. Don't get this confused with the normal Egg credit card, it's a totally different product.
This has some functions of a current account. You can have a positive balance, and easily transfer money to other bank accounts. This feature enables it to be used as a ‘mule' card for shifting cash from a 0% deal into your normal, everyday account.
What cards you need
To do this you will thus need both the Egg Money card and a credit card with a decent 0% offer for balance transfers. These are split into two categories; cards which charge a fee for balance transfers, and those that don’t.
-
Top cards with a fee. The Virgin* card offers new customers 0% for 16 months with a one-off 2.98% fee (then 18.6% APR). However, this is from the MBNA card family (including Alliance & Leicester), so if you already have one you may be rejected or given a lower credit limit.
Next best is from Abbey, which gives 0% for 15 months on debt shifted to it, for an ever-so-slightly higher fee of 3%, available in branch or on the phone (then 15.9% APR). For more options, read Best Balance Transfers article.
- Top fees-free cards. The only decent fees-free offer is five months with Northern Bank, only available from its Northern Ireland branches.
If you go for a card which charges a fee, work how much you’ll pay and take it off the profit in the Stoozing Calculator to see how much you’ll really make.
What to do
Get a 0% card for balance transfers and use this to ‘pay off' the Egg Money card. This means the Egg Money card now has a positive balance and this money can then be moved into your bank account. Therefore you now have cash in your bank account equal to the amount of 0% debt on the balance transfer card and can save that in a high interest account.
Got that? Probably not so follow through the guide below…
EXAMPLE OF HOW TO DO THIS
0% Card  Egg Money | |
Initial Scenario Cash wanted: £3,000 |
Ask your 0% balance transfer card to do a £3,000 balance transfer from Egg Money. In practical terms this means it will pay £3,000 off the Egg Money card, even though no debt exists there. This shouldn't normally be a problem, as most credit cards' terms don't specify a debt must exist to do a balance transfer, however if specifically asked then don't lie, as that'd be fraud. |
| Egg Money Savings Account |
|
Current Scenario Cash wanted: £3,000 |
Now we need to get the money from Egg Money into your high interest savings account. This is simple; just use Egg Money's facility to switch cash to your current account. Go to the balance transfer section of Egg's website, and select the option for a balance transfer to your bank account. In other words it now pays the three grand into your bank account at no charge (because you're in credit). From here, switch the cash to your savings account in the normal way |
Final Scenario: Savings account: £3,000, | |
STEP 2: Earn the maximum interest on the debts
You now have debts on the credit card, and a corresponding amount in credit in your current account (or on Egg Money).
It’s time to maximize the interest you earn, by moving the money into the highest interest safe savings vehicle possible. Always ensure it's one giving you access to the cash whenever it's needed in case you have to pay off the credit card bill quickly.
If you used the ‘easy route' to get the 0% debt, then don't wait for the cash to build up, siphon it off into the savings account as soon as possible. If you used a Super Balance Transfer or the Egg Money route, you'll make the biggest gain by shifting your cash again to a top paying account.
Where to save the cash
You want risk-free easy access, utilise a tax-free Cash ISA allowing up to £3,600 a year tax-free savings. If your ISA allowance is used up, put the money in the best paying Instant Access Savings account.
Anyone with a flexible or offset mortgage, where money can be deposited and then taken out at will, should simply pay all the cash into that. The mortgage interest reduction outweighs even the best cash ISA returns.
- Top Cash ISA. For alternatives and details read the top Cash ISA article, plus read Are Your Savings Safe? to see how your cash is protected in overseas banks.
- Savings Account. For more details read the top Instant Access Savings article.
STEP 3: Time to earn cash
The credit card debt is now at 0% and the savings at hopefully 4% ish. All you need do is diarise the date the 0% ends and sit back earning interest. Though there are a couple of things to watch for:
- Don't get card protection insurance
There's no need to tick the box for this policy, it's unnecessary as, if a problem occurs, you can pay off this debt with the savings.
- Ensure you're paying the minimum monthly repayments
Set up a direct debit to pay the credit card's minimum monthly repayments, usually around 2-3% of the outstanding balance, 0% interest doesn't mean nothing to repay.
STEP 4: Keep it up and increase the gain
As the 0% is coming to an end you could simply pay off the debt with the savings and bag the gains. Yet it’s far better to use a Balance Transfer to move the debt to another 0% card, thus leaving you earning more interest. Plus you can restart the whole scheme with another new card at the same time; it's possible to do this whole system with two, three or four cards consecutively.
Will it hit your credit score?
Most lenders' scoring systems aren't sophisticated enough to detect that you're playing this free cash gain. Yet multiple applications, especially at the same time, and high outstanding debts, even at 0%, will diminish your ability to get competitive credit, so the most important thing is to spread card applications out.
Though it doesn't work this way, a good way to think of it is, that you won't have problems until you have 10 cards or so, but there are no guarantees (read Credit Scoring article). The highest amount at 0% I've ever heard of was £80,000 – netting that stoozer nearly £5,000 a year as the money was off-set in his mortgage.
A note for the curious: Where does ‘Stoozing’ come from?
As the number of 0% cards increased, so did the number of people taking advantage. The now commonly used name is ‘stoozing', used to describe any technique to profit out of playing credit card companies deals.
From what I can gather, a couple of years after the technique started, the term started to gain common usage in the discussion forums of ‘the Fool' website, due to a poster there called Stooz. Yet regardless of whether it's ‘free cash' or ‘stoozing' either way, hopefully it'll be cash in your pocket.
The Stoozing Calculator: How much will you make?
To give an idea of how much you’d make, I’ve built a simple calculator. Tell it how much 0% debt you’re going to get, the interest your savings account pays (plus whether you’ll be taxed on it), and how long you plan to stooze for; then it’ll tell you what the likely profit is.
Guide to using the calculator
To keep the calculator user-friendly, a few assumptions have been made. Some may affect how you should use the calculator to get the right result for you.
New ‘Simply Spend’ debts. Anyone building up debt to stooze gradually with the ‘Simply Spend’ method won’t be able to put a fixed lump sum into the calculator. Instead, halve your intended final amount of debt, and put this in; it’ll give a close estimate of what you’ll make. Anyone with existing ‘Simply Spend’ debt can use the calculator normally.
Balance transfer fee. Some 0% cards charge a fee for balance transferring, and the calculator doesn’t take that into account. So if you paid a fee, work out what it was, and subtract it from the results to get your real stoozing profit.
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