Stoozing – make free cash

Earn interest from 0% credit cards

You can make £100s in profit by cleverly manipulating credit cards to save what you borrow at high interest!

During the last decade this got trickier as savings rates were spitworthily low. But now that those rates have increased significantly, the art of stoozing has been revitalised!

This guide was originally written by Martin Lewis, and is now updated by the MSE Money Team. 

The premise... borrow free, earn £100s

What is stoozing? Earn interest on 0% credit cards

Loads of cards lend new customers money at 0%. 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. The biggest stooze-pot we heard about was £80,000 of 0% credit card debt (multiple cards, continually rolling onto 0% deals) which saved the 'stoozer' nearly £5,000 a year as the money was offset against their mortgage.

Though you can't match those figures now, it's still possible to make a bit of free cash.

But if you're looking for more than just 0% spending or you've debts and don't think stoozing is for you, see our credit cards page for full options.

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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 history. 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 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: Make the minimum repayments only

Don't try to repay this card. Just set up a direct debit to make the minimum monthly repayments, usually around 2% of the outstanding balance. As all spending is on the credit card, cash isn't withdrawn from your current account, allowing unspent wages to build up.

However, always make sure you make at least the minimum payments – 0% interest doesn't mean nothing to repay. If you miss a payment, you could lose the 0% promo offer, messing up your entire stooze.

This means the debt on the credit card will be matched by extra cash in your current account which can then be moved to a high interest savings account (see the next step for where to save).

STEP 3: Earn max interest on the 'debts'

You now have debts on the credit card, and approximately 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, siphon it off into the savings account as soon as 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.

  • Easy-access savings account. These tend to be best as you're building up the savings as you can pay in and out of them at will. For full info and best buys see the Top savings accounts guide. Or see Top cash ISAs if you'll pay tax on the interest in normal savings.

  • Top paying current accounts. The top savings rates right now come from savings accounts linked to current accounts – though this is only usually on smaller amounts. See our Best Bank Accounts guide for the current crop.

Or, if you've a flexible or offset mortgage, you may be better off putting the stooze cash in to this to minimise the interest (most mortgages don't allow this, and don't confuse it 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 likely be a better use of your stoozed cash.

STEP 4: Increase your profit

When the end of the 0% period approaches, you can choose to simply pay off the debt with the savings and bag the gains, or shift the debt again to another cheap balance transfer to keep earning interest on the savings. If you take the second option, always try to grab the balance transfer card with the lowest fee possible. 

Plus, you can restart the whole scheme with another new 0% spending card at the same time. It's possible to do this whole system with two, three or four cards consecutively. 

How much can you make from stoozing?

Here's an example of how much you could make from using this technique:

Sally Stoozer gets a 21mth credit card with a £5,000 limit. She usually spends £1,250 a month, and puts all that spending on the card. She moves an equal sum of money from her bank account to a 5.15% easy-access account each month, while paying just the monthly minimum on the card.

A little after four months Sally has nearly £5,000 in there, which builds in interest while she makes the minimum payments on the card from another account. When the 0% period on the card ends, she pays off the remaining balance and, after paying herself back for the minimum payments she's already made, has £400 profit left in the account.

Will stoozing 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, and mortgage affordability checks are getting tougher, so it's best to start small and not overstretch yourself (read the Credit Scoring guide). 

And if you have a mortgage application or important credit application coming up, a credit card debt (especially if it's maxed out) could affect lenders' affordability checks, so you might need to hold off on stoozing.  

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

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

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.

We gather that a couple of years after the technique started, the term started to gain common usage in the discussion forums of ‘the Motley Fool' website, due to a contributer 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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