In this article we explain what stoozing is, how it works and how you can use it to make free money from credit card companies.
What is stoozing?
Stoozing is a technique that enables you to earn free money by taking advantage of 0% credit card offers. You do this by borrowing money via a 0% purchase credit card and then placing it in a savings account to earn interest.
How does stoozing work?
This is how stoozing works:
1 - Take out a new 0% purchase credit card
If you've got a good credit rating, you take out a 0% purchase credit card which means everything you buy on that card for an agreed period of time, doesn't attract any interest. Make sure that you diarise the date when the 0% purchase offer ends. Read our round-up of the best 0% purchase credit cards.
2 - Change how you pay for everyday items
Rather than paying for everyday items using the money in your current account (i.e from your wages) instead use your new 0% purchase credit card for all your everyday spending. It is then important to make sure that you do not spend the money building up in your current account and it's also important to never withdraw cash on your credit card. Withdrawing cash on a credit card not only impacts your credit score but will also incur interest from your credit card company.
3 - Pay the minimum amount off the credit card each month
The next step is to pay the minimum monthly repayment allowed on your 0% purchase credit card via direct debit from your current account each month.
4 - Move any spare money from your current account into a savings account
Periodically (at least once a month) move any unspent money from your current account, that you would normally have used for your everyday spending, into a savings account paying the highest rate of interest possible. In this way the money building up in your savings account should match the balance that is building up on your 0% purchase credit card. Read our article on the best savings accounts in the UK to find the most suitable accounts paying the highest rate of interest. It is important to ensure that you are able to access to your money when your 0% purchase credit card offer period ends.
5 - Clear the credit card balance when the 0% purchase period ends
When the deal period on your 0% purchase credit card comes to an end, clear the balance using the money that has accrued in your savings account.
6 - Keep the savings account interest
After clearing the credit card balance completely you will be left with the interest you earned on the money borrowed from the credit card company.
How to boost the money you make from stoozing
It is possible to further boost the money that you make from stoozing. The method is the same as above but instead of clearing the debt on the credit card at the end of the 0% purchase period you instead take out a new 0% balance transfer credit card, that doesn’t charge a fee for transferring balances, and transfer the 0% purchase credit card balance onto the new balance transfer credit card. You then leave the money in your savings account to continue to earn interest for even longer.
At the end of the 0% balance transfer period you then clear the balance transfer credit card using the money in your savings account, keeping the interest as profit.
Pros and cons of stoozing
Pros
You can make free money and it is legal.
Cons
There are a number of potential downsides to stoozing. Taking out lots of credit cards in a short space of time and having high credit card balances can have a negative impact on your credit report and your credit score which could hamper your ability to borrow money in the future for legitimate reasons. That is why it is inadvisable to try stoozing if you plan to apply for a mortgage in the near future.
Also if you apply for a 0% balance transfer credit card that doesn’t charge a transfer fee, in an attempt to boost the money you make from stoozing, you aren’t guaranteed to be accepted. Instead, it is possible that the credit card company may only offer you a balance transfer card where a fee is applied, which is typically around 2%-3% of the balance, because of your personal circumstances.
If this happens to you, or you are rejected altogether, but you have already locked your savings away in a fixed rate savings account you could end up in a situation where you might have to try and get your money back from the savings account provider to clear the debt that you have on the original 0% purchase credit credit card. You are unlikely to be able to do that, at least without incurring some kind of financial penalty.
Obviously you don’t have to use a fixed term savings account (where you lock your money away to get 4 or 5% interest a year) because you can now get a decent level of interest on some easy access savings accounts and some high interest current accounts.
Stoozing alternative - use a cashback credit card instead
If you want to use credit cards to make free money then most people would probably be better off just using a cashback credit card for everyday spending that pays you money as you spend on it. However, it is important that you clear the balance on the credit card at the end of each month. Read our regularly updated round-up of the best cashback credit cards.
How much money can you make from stoozing?
I built a stoozing calculator to work out the money that you would make from stoozing versus the money you can make from simply using a cashback credit card.
The amount of money you make from stoozing or using a cashback credit cards depends on a number of factors including the cashback rate, the credit limits on each card, the amount of money you spend each month as well as the rate of interest you earn on money put in a savings account.
Stoozing vs cashback credit card
The chart below summaries whether stoozing or using a cashback credit would make more money based upon the current best savings account rates (4%), the best 0% purchase credit card offer (25 month interest free) and the best cashback credit card offer (0.5% cashback on the first £10,000 spent a year and then 1% thereafter). Neither credit card has an annual fee.
Where a number is coloured green that means that using a cashback credit card gives the highest reward. Where a number is coloured red that means that stoozing gives the highest reward. As you can see stoozing only really works successfully if you secure a credit card limit of £5,000 or more on the 0% purchase credit card you are offered.
| Monthly spending when stoozing or using cashback credit card | |||||||||
| 0% Purchase credit card limit | £500 per month | £1,000 per month | £1,500 per month | £2,000 per month | £2,500 per month | £3,000 per month | £3,500 per month | £4,000 per month | £5,000 per month |
| £500 | £63 | £145 | £268 | £390 | £513 | £635 | £758 | £880 | £1,125 |
| £1,000 | £85 | £145 | £268 | £390 | £513 | £635 | £758 | £880 | £1,125 |
| £1,500 | £125 | £145 | £268 | £390 | £513 | £635 | £758 | £880 | £1,125 |
| £2,000 | £163 | £170 | £268 | £390 | £513 | £635 | £758 | £880 | £1,125 |
| £3,000 | £233 | £249 | £268 | £390 | £513 | £635 | £758 | £880 | £1,125 |
| £4,000 | £297 | £325 | £334 | £390 | £513 | £635 | £758 | £880 | £1,125 |
| £5,000 | £353 | £398 | £412 | £419 | £513 | £635 | £758 | £880 | £1,125 |
| £6,000 | £403 | £467 | £488 | £499 | £513 | £635 | £758 | £880 | £1,125 |
| £7,000 | £445 | £532 | £560 | £575 | £584 | £635 | £758 | £880 | £1,125 |
| £8,000 | £481 | £594 | £631 | £651 | £662 | £669 | £758 | £880 | £1,125 |
| £9,000 | £509 | £652 | £700 | £723 | £738 | £748 | £758 | £880 | £1,125 |
| £10,000 | £531 | £706 | £765 | £796 | £813 | £824 | £833 | £880 | £1,125 |
