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Stoozing – make free cash

Earn interest from 0% credit cards

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Martin and Sam

Updated June 2018

Stoozing's the art of making money by earning interest on cash credit cards lend you at 0%. While not quite as lucrative as it used to be, you can still make a pretty penny from long 0% deals, fee-free balance transfers and tax free high-interest bank savings accounts.

Beware though, you need to know what you're doing. Here's our step-by-step guide showing exactly how you do it, the best 0% spending cards and interest-paying bank or savings accounts to use, and what to watch out for.

The premise – borrow free, earn £100s!

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.

Martin broadcasted the first set strategy for it around 2000, and it works like this: Lots of cards lend new customers money at 0% (see options here). By grabbing this cash then saving it at as high a rate of interest as possible, you're earning interest on money they've lent you for free.

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.

We're not quite back to the heyday of stoozing but with plenty of long 0% spending deals and bank accounts paying interest of up to 5%, stoozing's definitely back.

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 Best Cashback Cards 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

The aim is to get the longest 0% credit deal you can and with possible added cashback rewards to boost your stoozing gains (don't confuse these cards with 0% balance transfers, which are for shifting debts).

Which cards'll accept you? The only way to find out is to apply, but that marks your credit file. So our Free 0% Purchases Eligibility Calculator shows your odds of getting each card, to minimise applications without hitting your file. Most of the cards featured in this guide are in it.

The top 0% credit cards

The most profitable plastic here are the cards where the longest 0% period is combined with the most lucrative rewards programme.

Depending on your credit score and the amount you spend, this can be done with multiple cards. But it's best to start at the top and work your way down this list.

Sainsbury's card

Long 0% and possible £25 bonus Nectar pts

Sainsbury's Nectar* – 28 months 0% (19.9% rep APR after)

This Sainsbury's* card offers a long 0% period, and if accepted you'll definitely get the full 28 months. You'll also earn Nectar points on all spending.

Plus, you'll get 500 bonus Nectar points worth £2.50 each time you spend £20+ in Sainsbury's in the first two months from receiving your card (max 5,000 points, worth £25). Doing a big shop? You can split it into smaller £20 chunks to max the bonus, getting 500 points on each transaction.

Need-to-knows
  • New customers applying by 30 Jul 2018 will get 500 bonus Nectar points worth £2.50 each time they spend £20+ in Sainsbury's in the first two months from receiving their card – but don't use this as an excuse to spend more than you normally would.
  • You can also shop online at Sainsbury's to trigger the points bonuses, but buying anything (incl fuel) at Sainsbury's petrol stations doesn't count.
  • You need to give your Nectar card number when you apply for the credit card.
  • The bonus points will be added to your Nectar account within two months of the end of the offer period.
  • You get two points per £1 spent on Sainsbury's shopping and fuel, and one point per £5 spent elsewhere.
  • Make sure you fully clear the card(s) by the end of the 28 months or you'll be charged 19.9% interest on any remaining balance. Poorer credit scorers may pay up to 28.9%.
  • Always pay at least the minimum monthly repayment, or you'll lose the 0% deal.
Eligibility Calculator
(MSE's free tool)
APPLY*
(at lender site)

Protect your credit score and check chances of getting card

Stats box
  • Spending length: 28 months 0% | Card issuer: Mastercard | Min income: N/A
  • Rep variable APR: 19.9% (see Official APR Examples)
  • Minimum repayment: Greater of 1% of balance plus interest, 2.25% or £5

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.

Now it's time to 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.

Where to save the cash

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 top savings rates right now come from current accounts – though this isn't as lucrative as it used to be as several banks have cut their interest rates over the last couple of years.

  • Top paying current account

    The Nationwide FlexDirect account pays the highest interest on small amounts, paying 5% on the first £2,500 that's in your account – though it's only fixed for one year, after which it drops to 1%. To get the interest, you need to pay in £1,000 per month.

    Another option is the Tesco Current Account which pays 3% on up to £3,000 until 1 April 2019. To earn any interest you need to pay in £750+ and pay out at least three direct debits each statement month, and you can open two accounts each if you want.

  • Pay cash into a flexible or offset mortgage

    Whether you should do this will depend on what your mortgage rate is, and whether the mortgage allows you to offset the interest against savings (most don't, and don't confuse this with overpaying – it's not the same thing). As a rule of thumb, if your savings rate is higher than your mortgage rate, then save. If your mortgage rate's higher than what you can get on savings, then offsetting will be a better use of your stoozed cash.

    It works like this... Say your mortgage balance is £150,000 and you have £50,000 in savings in a linked account, you only pay interest on the £100,000 difference. With an offset you are effectively saving at your mortgage rate, usually with easy access. So cash, even a couple of thousand pounds, put into an offset account can give you serious savings.

  • Top cash ISA

    These allow every UK adult to save up to £20,000, and pay no tax on the interest earned. Plus, any interest from ISAs it doesn't count towards your personal savings allowance meaning they're a good place to save if bank account savings interest has taken you over your personal allowance.
  • The current open-to-all highest-paying cash ISA that allows access is the Easy Access Cash ISA from Shawbrook Bank. It pays 1.3% AER variable, and you can make unlimited withdrawals, but you'll need to have at least £1,000 to save to get the top rate. For full details, plus all the alternatives, see the Top Cash ISAs guide.

  • Easy access savings account

    The highest-paying standard savings account is the Online Saver account from the Post Office, paying 1.33% AER variable. It can be opened online with £1.

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

To really ramp up your gain, you can shift the debt again to another cheap balance transfer to keep earning interest on the savings.

Always try to grab the balance transfer card with the lowest fee possible. Balance transfer fees used to be around 2-3%, but have dropped in many cases to zero. Check the current best buys below without a fee, and balance transfers for the full selection.

Santander

Longest no-fee 0% card and you'll get the headline deal if accepted

Santander* 27mths 0%, no fee (18.9% interest after)

This Santander* card is a good no-fee option, and if you're accepted you'll definitely get the full 0% period. Unusually, you'll pay no fee if you transfer at any point within the 27mths, though you'd have less interest-free time if you waited.

Need-to-knows
  • After the 0% period ends, it's 18.9% interest.
  • Always pay at least the minimum monthly repayment, or you'll lose the 0% deal.
  • Don't spend/withdraw cash on this card. It usually isn't at the cheap rate and cash withdrawals hit your credit file.
Eligibility Calculator
(MSE's free tool)
APPLY*
(at lender site)

Protect your credit score and check chances of getting card

Stats box
  • Balance transfer length & fee: 27 months 0%, no fee
  • Min payment: Greater of 1% of balance plus interest or £5 | Min balance transfer amount: £100
  • Min income: N/A | Card issuer: Mastercard | Balance transfer time limit: N/A
  • Rate: 18.9% representative APR (see Official APR Examples)

Will it hit your credit score?

Most lenders' scoring systems aren't sophisticated enough to detect that you're playing this free cash gain. dart board

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).

A note for the curious: Where does 'stoozing' come from?

This isn't a fly-by-night system. Martin first broadcasted a strategy for this in early 2000, as 0% credit card interest rates began. Many who started back then now report £1,000s in total gains.

As the number of 0% cards increased, so did the number of people taking advantage. The commonly used name is 'stoozing', used to describe any technique to profit out of playing credit card companies' deals.

We gather a couple of years after the technique started, the term gained common usage in The Motley Fool website's forums, due to a contributor there called Stooz. Yet regardless of whether it's 'free cash' or 'stoozing', either way, hopefully it'll be cash in your pocket.

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