How Stoozing Can Make You Free Money on Your Credit Cards
December 11, 2022 Updated July 14, 2023
Takeaways
Table of Contents
Stoozing is back! It is an easy way of making free money. It is a way of making money with reduced uncertainty, although discipline is required! Due to the process involved, you are virtually guaranteed to make money. Yet it also requires an honest appraisal of yourself and whether you are prepared to do what is required.
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Use Bank's knowledge of you to your own advantage
What is Stoozing?
Stoozing is a way of using your past good financial behaviour to your own advantage. In essence you leverage all the data the bank holds on you. If you have a strong credit score you will be able to borrow at a low interest rate. In many cases this can be as low as 0% on a credit card offer. This means that for a period of time (usually 12-18months), you can borrow money free of charge.
In effect, you are using credit card offers as a 0% interest free loan. To gain access to this money you have to take up the credit card offer with the 0% interest free loan. Once you receive this, you spend the balance you are given on life costs. The cash you would normally spend you place in a high saving account. As a result you build up interest on this cash balance.
When the 0% interest free saving period ends and the end of the set period, you take the cash you had placed in the high savings account and pay it back. The difference left (the interest earned) is the profit. (You also have the option of finding another 0% credit card offer and extending the process. This does mean having to repeat the process, but with the extra interest you have earned). In effect this is a relatively risk-free way of making money.
When did stoozing start?
There is no clear date when it first started but it is likely to be around for some time in one form or another. Such a money hack is unlikely to have missed by many. The word itself if believed to have originated in the earls 2000s when someone mentioned 'doing a stooz' in an online chat. Some time later it actually ended up in the dictionary!
It was a popular strategy until the 2008 credit crunch where rates dropped so low that there was no interest to be earned. As a result, since 2008, there was no point in trying to stooze. With the interest rate cycle turning, it is becoming a viable strategy all over again.
Who is it for?
Stoozing is not for everyone. Although it is not a hard strategy to run, it requires a great deal of focus and self-discipline. As a result it is not for everyone. If you lack self-discipline, are forgetful or inattentive then you should probably stop reading now.
You will also need to have an excellent credit record to ensure you get 0% interest free credit card offers. Without this kind of off this strategy does not work. It goes without saying that you should not have any other credit card debt elsewhere.
This is because you are unlikely to have another credit card issued to you, and if you do, it is unlikely to be 0%. This is due to the increased risk the provider will need to price in on account of you already having some debt.
What should you watch out for?
Never exceed your credit limit. If you do the charges will be prohibitive and will likely wipe out any profit you are making. You should also only repay the minimum each month, so you can maximise the interest you are earning in the saving account. Finally you should only repay the card at the very end of the repayment period.
What is the risk involved?
Do it right and it is risk free. The risk is only around execution, specifically you ability to do what is required at set time points. For example if you miss the monthly repayment you risk loosing the 0% interest rate offered. As a result you could loose your profit and even loose money.
You have to be clear that stoozing involves getting into debt. If it goes wrong, this debt will need to be repaid. It goes without saying that if you are not good at handling debt you should avoid this strategy.
For those for whom the risk is too great then you can always try moving your bank account to another bank, There often deals paying £100-200 on offer.
For those who have the option, you can do the same with a 0% overdraft (something a student would have).
Conclusion
Stoozing is an easy and (relatively) risk free rate of many money. The main risk is with you. Can you be trusted to be disciplined? You have to ensure that you are not tempted to spend the money on something you enjoy. The money is only there for investment purposes.
The opportunity is clear, especially with increasing interest rates. Indeed this may also be a threat. With banks able to charge more on loans due to raising interest rates, they may be less inclined to offer these 0% interest free credit card offers. As a result anyone looking to earn some cash with less risk than investment in the stock market should actively consider stoozing!
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