Stoozing is all about how to make money from 0% interest periods, but how does it work?
Using 0% interest introductory periods on credit cards can help you make money, but you have to find the best bank accounts and manage your card payments.
There are many different methods and terms for borrowing on your credit card to make money, but it is most commonly known as stoozing. Here we explain what ‘stoozing’ is, how to be a ‘stoozer’ and use a ‘stoozepot’ to earn money.
What is stoozing?
Stoozing is treating 0% introductory rates on credit cards as interest free loans. You then invest this 0% money into high-interest savings accounts. Any interest gained after the introductory period ends and the card is paid off is profit.
Stoozing reached its heyday before the 2008 crash when credit was more freely available and interest rates higher. Some people were reported to have stoozed balances well into the tens of thousands.
It is less common today, but with credit making something of a comeback it could soon very much be back on the cards.
How to make money from stoozing?
There are many different techniques to stooze effectively, but for most intents and purposes there are two methods: quick and easy, or advanced.
The simple way – spend and save
This method is reasonably straight-forward – simply build up your cash savings by using a 0% interest credit card to make as many purchases as possible.
- Find a savings account that pays you the most AER and get the best 0% purchase card you can.
- Make as many of day-to-day purchases you can afford on your card.
- Deposit the cash you save into a high interest account. Remember, your deposits need to match your card spending.
- Once the 0% interest period expires use the saved cash to pay off the balance.
- Any money left over is your profit.
So if you borrowed £1,200 on a 23 month 0% purchase card, matched this with £1,200 in deposits in a 5% interest account, you could make about £120 by the time the 0% period expires. However, the larger the sum of money you ‘stooze’ the bigger the returns will be.
You will need to be disciplined with your spending and never borrow no more than you deposit – if you don’t pay off the card debt before the 0% period expires you’ll lose your profits.
Advanced stoozing – card balancing
This is how you can make bigger profits from creatively moving debts around, but it is not for everyone. It requires meticulous planning and calculations to manage.
- First you need a money transfer credit card that will allow you to transfer money directly into your bank account.
- Transfer money from the card into a high interest account or other investment (investments typically offer higher returns but are risky, and could leave you worse off).
- You can use a money transfer card to put cash into your account and transfer that card debt to a 0% balance transfer card. Balance transfer cards with no, or low, transfer fees can keep costs as minimal as possible.
- When the 0% period on the money transfer card expires, pay off the debt with the money from the savings account, there should be extra money left over as profit.
This method can be used multiple times with many cards to create very large ‘stoozepots’. These can generate hundreds, possibly even thousands, of pounds in interest. For example, £10,000 could earn you £500 a year from an account paying 5% AER.
However, balancing this much unsecured debt can be risky and requires commitment to manage multiple cards.
You will need to make sure you’ve worked out that everything will add up in your favour and transfer fees won’t wipe out your profits.
What to watch out for
Don’t get mixed up, make sure to not use your 0% purchase card to make a money transfer, and do not use your money transfer card to make any purchases. These cards will often offer different rates for purchases and money transfers.
You must meet your minimum monthly card repayments or you will lose your 0% interest period. This would make your ‘stoozing’ pointless and you should pay off your card debts as soon as possible or you will be out of pocket.
If you do decide to become a ‘stoozer’, you will need a good credit score, so regularly check your credit report – read our guide on how to improve your credit score to learn more.
To keep credit scores clean, ‘stoozers’ should also make sure to close credit cards once they’ve been paid off.
Finally don’t forget to carefully read through all the terms and conditions, thoroughly read credit card summary boxes so you’re not caught out by any hidden fees. Then work out how much money you can make and decide whether it’s worth putting in the effort.
For the less adventurous – avoiding interest
Many of us are are not committed enough to put in the effort to stooze credit cards but there are simpler ways to exploit 0% periods on credit cards with savvy use of 0% purchase and balance transfer cards.
This is much simpler activity – simply make your purchases on with a credit card offering a 0% introductory period. When this expires transfer the debt onto a balance transfer card.
Provided you meet your minimum repayments and keep your credit score in good health you can avoid interest accruing on your debts for many years, until you can afford to pay them back.
- Interest free credit cards How can you borrow interest free with a credit card
- Managing debt with a 0% balance transfer credit card Defer paying interest on your card debts for years
- How current account interest rates work How to get more money out of your bank deposits