Stoozing - make money with 0% credit cards

Stoozing – make free cash

Earn interest from 0% credit cards

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. Beware though, if done badly, stoozing can lead to you losing money and significantly lower your credit score. But, if you're sure you're financially savvy, 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?

What is stoozing? Earn interest on 0% credit cards

Stoozing is the bizarre name coined by money nerds in the early days of online forums to describe the art of making money out of 0% deals. It came to the fore among die-hard money savers 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 the 'stoozer' nearly £5,000 a year as the money was offset in their flexible mortgage.

Though you can't 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. Stoozing means you'll have a credit card debt, so if you have a mortgage application or important credit application coming up, it might be best to steer clear – as it could affect your lender's affordability checks. If you're looking for more than just 0% spending, or you've debts, see our Credit Cards page for full options.

  • Where does the term '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.

    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.

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 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.

  • Golden rules for 0% spending cards

    1. Always pay at least the monthly minimum and stick within your limit, or you can lose the 0% and get hit with £10ish fees.
    2. Clear the debt or balance-transfer before the 0% ends, or costs soar to typical 19.9% to 22.9% interest rates, though it can be much higher (see APR Examples).
    3. They're usually only cheap for spending, not cash/balance transfers.

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 plan.

  • 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 need access to the cash before the 0% ends, so you pay off the card debt.

As a start, you could open an easy access account and drip-feed your money there. The next stage will depend on how quickly your normal spending means you'll be up to the credit limit on the card. Once you've reached the credit limit, and have the same amount unspent in a top-paying easy access account, you could look to move that money to an even better fixed-rate account – as long as, crucially, you are able to withdraw the cash when you need it to clear the credit card debt. DON'T opt for a fix where your money is locked away for too long to allow this.

The personal savings allowance helps in this quest to earn the maximum amount of interest, 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 sitting at 0% and the savings hopefully earning a few percent. Now, diarise the date the 0% ends, and sit back while netting interest.

  • Best places to save cash

    • Top paying current accounts. The top savings rates right now come from current accounts – though this isn't as lucrative as it used to be, and only usually on smaller amounts. See our Best Bank Accounts guide for the current crop.

    • Easy-access savings account. These tend to pay higher rates than cash ISAs. For full info and best buys see the Top Savings Accounts guide.

    • Fixed rate savings account. These tend to pay higher rates easy-access accounts, though are only suitable for stoozing if you have enough time to lock your money away before the credit card debt needs to be paid. For full info and best buys see the Top Fixed Rate Accounts guide.
    • Top cash ISA. These allow every UK adult to save up to £20,000 per tax year, and never pay tax on the interest earned. They're a good place to save if savings interest has taken you over your personal allowance. For full details, plus all the alternatives, see the Top Cash ISAs guide.

    • 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.
  • You could make £100s

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

    Sally Stoozer gets a 24-month credit card with a £5,000 limit. She usually spends £1,000 a month from her bank account, but now she puts all that spending on the card. So each month she pays the minimum payment on the card and transfers the rest to an easy-access account at 2.75%.

    After five months she has around £4,565 there, which she transfers to an 18-month savings account at 4.4%. When that ends she has around £4,870 in the account, which she uses to clear the remaining balance on the card and has £340 left over.

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.

It's important, though, that you don't lock your money away in a longer fix using the process above because you're planning to do this step – in case you're rejected for the balance transfer card. If that's the case, you'll still need access to your stooze pot to pay off your original credit card.

When looking for a balance transfer card, always try to go for the one 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, 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.  

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