Stoozing: A guide to making money with your credit card

ONE of the most useful and most used credit card rewards is the 0% deal.

0% offers are best known for giving cardholders the opportunity borrow for free or repay high-interest overdrafts, credit cards or loans but they can also be used to make money using a crafty techniques known as stoozing.

What is stoozing?

Simply put stoozing is a way to turn a profit on borrowed money.

We've all heard the phrase 'you need to have money to make money'.

Stoozers agree but with this addendum: 'you don't need to have it forever'.

However, it almost goes without saying that there's some small print between borrowing at 0% and pocketing some extra cash.

First, there's the fact that this money-making trick requires successful applications to some of the UK's top credit card deals.

That means stoozers need an excellent credit rating to get going, to see what that means read our guide to credit scores.

Second, stoozing requires discipline and faultless credit card behaviour. For example, while carrying out this trick cardholders cannot:

• Use the card to withdraw cash or for any other cash transaction (e.g. check-out 'cash back', foreign currency, travellers cheques, shopping vouchers, gambling).
• Use the card for purchases without extreme caution.
• Miss any minimum monthly repayments or exceed the credit limit.

Anyone who won't be able to stick to those basic rules will never be able to make money through stoozing.

For those that can, here's how it's done.

Pay attention class, because this is just a little bit complicated.

Stooze 1: 0% purchases + savings

The premise of this technique is extremely simple: just use a 0% purchase credit card to pay for as much as possible.

While the credit card balance builds up put all the cash that's not being spent - i.e. the current account balance usually used for everyday expenses - into a high-yield savings account while continuing to make the credit card's minimum monthly payments.

In other words, as a credit cardholder, the stoozer is spending for 'free'.

As a saver, however, they're raking in interest.

Still confused? Here's how it works step-by-step.

How to do it:

• Apply for a 0% purchases credit card and open a high-interest savings account.
• As soon as the credit card arrives start to use it for all everyday spending.
• Move as much 'current account' cash - typically the stoozer's pay packet - as possible straight to savings.
• Keep up this system - moving cash to savings, spending on the credit card and only making the minimum repayment - until the 0% period is nearly up.
• When the 0% period is about to expire, use the savings cash to repay the credit card balance in full and keep the profits.

How to do it profitably:

To make money cardholders need to continue with this trick for as long as possible. Unfortunately, the longest 0% purchases deals require excellent credit ratings:

For purchases:	0% Period	Rewards
Tesco Clubcard	0% for 15 mths	Tesco Clubcard points	Apply » More »
Representative Example: 16.9% p.a. variable on purchases. This is equivalent to 16.9% APR representative variable based on a credit limit of £1,200. Tesco Bank, PO Box 5747, Southend on Sea, SS1 9AJ.
Halifax All in One	0% for 15 mths The APR and length of the promotional offer are dependent on your personal circumstances.	Halifax Offers: discounts on travel, entertainment & shopping	Apply » More »
Representative Example: 17.95% p.a. variable on purchases. This is equivalent to 17.9% APR representative variable based on a credit limit of £1,200. Bank of Scotland plc, The Mound, Edinburgh, EH1 1YZ.
Barclaycard Platinum with Purchase	0% for 14 mths	Barclaycard Freedom & Thomas Cook Discounts	Apply » More »
Representative Example: 18.9% p.a. variable on purchases. This is equivalent to 18.9% APR representative variable based on a credit limit of £1,200. Barclays Bank, 1 Churchill Place, London, E14 5HP.

It's worth noting that collecting credit card rewards during this technique can boost profits, although the 0% deal remains the most important card facility.

In addition, 0% purchase credit cards are no good for using for cash transactions like ATM withdrawals, check-out 'cash back', foreign currency, shopping vouchers, gambling (including buying food and drink at a casino) etc.

Paying to make these transactions eats straight into profits.

Finally, to make this technique profitable it's very, very important that the cardholder keeps up with minimum monthly repayments, is very careful not to exceed the credit limit and doesn't spend the savings amount.

Stooze 2: 0% money transfer + savings

Just as above, with this technique the cardholder 'borrows' money from a 0% money transfer credit card and stores it in a high-yield savings account.

When the 0% balance offer is up, they simply take the cash out of the savings account, pay off the credit card and pocket the interest.

The downside is that making a mistake - for instance, withdrawing money from the ATM with the credit card which is expensive and not covered by 0% purchase or 0% balance transfers - could easily capsize the whole technique and make it worthless.

With that in mind, then, here's how to do it step-by-step.

How to do it:

• Apply for a 0% money transfer credit card and open a high-interest savings account.
• Move the allotted credit limit to a current account then straight on to high-interest savings. There's a fee to pay at this stage (likely be added to the credit card balance).
• Keep up with the minimum monthly repayments on the credit card and collect the interest earned on the savings account.
• When the 0% period is about to expire, use the savings cash to repay the credit card and keep the profits.

How to do it profitably:

As with the deal above, a money transfer, also known as a super balance transfer, can be hard to get hold of.

Click the 'more' buttons below for specific application criteria:

For money transfers:	0% Period	Fee	Additional
Virgin Money	0% for 20 mths	4%	-	Apply » More »
Representative Example: 16.8% p.a. variable on purchases. This is equivalent to 16.8% APR representative variable based on a credit limit of £1,200. Virgin Money, Discovery House, Whiting Road, Norwich, NR4 6EJ.
Virgin Money All Round	0% for 16 mths	4%	-	Apply » More »
Representative Example: 15.8% p.a. variable on purchases. This is equivalent to 15.8% APR representative variable based on a credit limit of £1,200. Virgin Money, Discovery House, Whiting Road, Norwich, NR4 6EJ.

To make a profit from this form of stoozing, the high interest savings account must offer a rate of interest higher than the balance transfer fee of the credit card.

For example, there's a 4% fee for moving the balance the savings account needs to offer more than 4% interest over the duration of the 0% period.

Here's the math (approximately!) for transferring and saving £1,000 for 12 months:

• Income: 6% AER on savings = £60
• Expenses: 4% transfer fee = £40
• PROFIT: £60 - £40 = £20

The problem at the moment is that there's a dearth of savings accounts with high enough interest rates to make a significant amount of cash.

Our guide to getting the best savings rate could help but it's a tough market and stoozers need to bear in mind that they'll need to be able to access all the cash quickly to repay the card: great rate or not a four-year bond isn't going to work out.

It used to be possible to move another balance from a 0% balance transfer credit card to a super balance transfer credit card, hugely increasing the money available to earn interest on but also increasing expenses substantially.

Now the extra costs mean that's difficult, if not impossible, to make a profit from.

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