-
Nectar cardholders can convert points to Avios from next week
21 January 2021
Coronavirus Finance & Bills Help
20 January 2021
Tip Email
FREE Weekly MoneySaving email
For all the latest deals, guides and loopholes simply sign up today - it’s spam free!
Stoozing – make free cash
Earn interest from 0% credit cards
Updated 16 October 2020
Stoozing's the art of making money by earning interest on cash that credit cards lend you at 0%. While not as lucrative as it used to be, you can still make a pretty penny as long as you know what you're doing. Here's how to do it and what to watch out for.
Looking for a card or savings account to help you stooze? See our 0% spending cards, 0% balance transfers and Top Savings guides.
What is stoozing?
Stoozing's the art of making money out of 0% deals. It became the vogue of money nerds when credit card companies first launched 0% deals as it lets you earn interest on money you've been lent for free. It works like this:
- Take out a 0% spending credit card
- Use this for all of your everyday spending
- Save the cash that builds up in your bank account at as high a rate of interest as possible
- When the 0% deal ends, use your savings to clear the card, or transfer the balance to another 0% card
In stoozing's heyday, the amounts people could get were huge, with the biggest stooze-pot we heard about being £80,000 of 0% credit card debt (multiple cards, continually rolling onto 0% deals) which saved that stoozer nearly £5,000 a year as the money was offset in his flexible mortgage.
Though it's much harder to match those figures now, it's still possible to make a bit of free cash.
Warning. Stoozing is ONLY for those who are debt-free & financially savvy. If you're not, avoid it as mistakes can be costly. If you're looking for more than just 0% spending, or you've debts, see our Credit Cards page for full options.
Who can do this?
Though lucrative, this technique is tricky, and not suitable for everyone. If you decide to give it a go, read this article in full, and make sure you understand the process, as mistakes can have a high cost.
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. Read the Best Balance Transfers guide.Ensure you're on the ball
Do it right and this is risk-free. Yet stoozing isn't for the forgetful, ill-disciplined or inattentive. If that's you, stop reading now, as getting this wrong costs.Consider cashback instead
If you're a little forgetful, or would just prefer a simpler way to make free cash, a more foolproof (but less lucrative) way to profit is simply using a cashback credit card and paying it off in full every month. For the current top picks, read the Credit card rewards guide, and see our Credit Cards page for more options.
How to stooze...
In a nutshell, the idea is to do your normal spending on an interest-free credit card, and let the dosh you'd normally be using build up in a savings account, earning interest.
This requires discipline, and is absolutely NOT a way to spend more than you would have – it's a money-making recipe. So don't overspend and never breach the card's credit limit.
STEP 1: Get a card offering 0% on new purchases
These specialist cards offer a number of months where no interest is charged on new spending, so done right there's no cheaper borrowing.
The aim is to get the longest 0% credit deal you can, though it's important not to confuse these cards with 0% balance transfers, which are for shifting debts.
See our top picks and full info:0% spending credit cards guide
Or see your chances of acceptance:MSE's Eligibility Calculator
STEP 2: Save the cash that builds in your bank
Once accepted, use the card for everything you buy; replacing all credit card, debit card, cheque and cash spending up to the credit limit – though never withdraw cash as you're charged interest.
As all spending is on the credit card, cash isn't withdrawn from your current account, allowing unspent wages to build up. This means the debt on the credit card will be matched by extra cash in your current account – and this forms the stooze pot you can use to save.
Always follow the golden rules on stoozing:
Don't exceed your credit limit. That can result in you losing the 0% deal and hurting your credit score.
This isn't an excuse to overspend. We're just using it as a method to build up savings to match the stooze pot.
Only make the MINIMUM repayments. Don't try to repay this card in full. Just set up a direct debit to make the minimum monthly repayments, usually around 2.5% of the outstanding balance. Don't miss any payments, or you could lose the 0% promo offer, messing up your entire stooze.
Never withdraw cash on these cards. That isn't at the cheap rate, you will pay interest even if you clear in full, and it can impact your credit score.
STEP 3: Earn max interest on the 'debts'
You now have debts on the credit card, and approximately the same amount in credit in your current account.
It's time to maximise the interest you earn by moving the money into the highest interest savings vehicle possible. Don't wait for the cash to build up, just siphon it off into the savings account as soon as possible.
The most important thing is that you put it somewhere with 'easy access' meaning you can withdraw the cash whenever you need it and clear the debt.
After that, the key is simply earning the maximum amount of interest – the personal savings allowance helps in this quest as it means savings interest is now paid to you tax-free (though if you're stoozing a large amount you may exceed your allowance, and will have to pay some tax).
The credit card debt is now at 0% and the savings hopefully earning a few percent. Now, diarise the date the 0% ends, and sit back while netting interest.
STEP 4: Boost it with a fee-free balance transfer
At the end of the 0% period (to really ramp up your gain), instead of using your savings to clear the balance, you can shift the debt again to another 0% balance transfer credit card to keep earning interest on the savings.
Always try to go for the balance transfer card with the lowest fee possible. Balance transfer fees are typically around 2-3% for the longest 0% periods, but opt for a shorter period and there are options with none at all.
See our top picks and full info:0% Balance transfers guide
Or see your chances of acceptance:MSE's Eligibility Calculator
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, clustered applications, and high outstanding debts, even at 0%, will diminish your ability to get competitive credit, so always spread card applications out.
In stoozing's early days, some people got huge amounts at 0%. Now lending criteria is tighter, so it's best to start small and not overstretch yourself (read the Credit Scoring guide).
Tip Email
FREE Weekly MoneySaving email
For all the latest deals, guides and loopholes simply sign up today - it’s spam free!
Spotted out of date info/broken links? Email: brokenlink@moneysavingexpert.com
-
'Excessive' claims management fees set to be capped - and it could save consumers thousands
21 January 2021![]()
A price cap on the 'excessive' fees claims management companies charge customers has today been proposed by the financial regulator in a bid to save people thousands - and the move has been welcomed by MoneySavingExpert.com founder Martin Lewis -
Nectar cardholders can convert points to Avios from next week
21 January 2021![]()
Nectar cardholders will be able to exchange loyalty points for Avios from next week, which they can then use to get travel-related perks. It comes after Avios ended a similar partnership with Tesco's Clubcard scheme earlier this week -
Hundreds of BP customers to have £2,000 prize 'win' honoured after competition gaffe – but you need to claim it
20 January 2021![]()
Hundreds of BP customers have wrongly been given receipts showing they’d won reward points worth £2,000. BP initially said this was a glitch and refused to pay out, although it has since U-turned and will now honour prize wins. But you need to submit a claim to get the points – here's what you need to know -
Martin Lewis slams Very for giving WRONG return rights info and forces the firm to replace customer's Apple Watch
20 January 2021![]()
MoneySavingExpert.com founder Martin Lewis has forced online retailer Very to apologise and offer one of its customers a ‘gesture of goodwill’, after it wrongly said it was unable to arrange a repair or replacement for a faulty Apple Watch -
Coronavirus Finance & Bills Help
20 January 2021![]()
Many are worried about the UK impact of the coronavirus on their ability to pay bills and even stay in their home. This guide tells you what help's out there if you can't pay bills or pay loans or credit cards back.
-
Martin Lewis VIDEO: Should you pay off your Plan 1 student loan?
11 January 2021![]()
If you started university between 1998 and 2012, or since then in Scotland and Northern Ireland, you'll have a Plan 1 student loan. While much is written about whether those with savings should overpay the current English Plan 2 student loans, there's little out there about Plan 1. I wanted to change that, so here's a video explaining how to decide... -
Martin Lewis: Payment holidays coming to an end – but should you take one? Mortgages, credit cards, loans, payday loans, car finance and more
5 January 2021![]()
Within the last week, we've seen the extension of coronavirus credit card, personal loan and overdraft help to 31 October 2020, with mortgage payment holidays already extended. The regulator's other help schemes are also likely to be extended too, including car finance and payday loans, yet should you do it?
MSE Tools & Calculators
Clever ways to calculate your finances
