/ Money

Is ‘stoozing’ worth the hassle?

Credit cards

When you work in a team of financial experts, you tend to learn lots of clever money-making tips. My personal favourite involves storing funds from a 0% interest credit card in a high-interest account; or stoozing.

Stoozing can make you hundreds of pounds a year with minimal effort, but it has its critics. Some people say it’s too risky and not worth the hassle. What do you think?

Stoozing first became popular back in the early 2000s, when savings accounts offered much healthier interest rates.

This was before credit card companies introduced fees for transfers to bank accounts too, so stoozers could make big profits simply by transferring funds from their card straight to their savings account.

The introduction of these transfer fees made things slightly more complicated. Most stoozers get around them by completing their everyday spending on a 0% interest credit card, leaving their regular earnings free to earn interest in a high-interest current account.

Stoozing: how much could you save?

Basic-rate taxpayers who ‘stooze’ away £2,000 in a TSB Classic Plus will make a cool £80 a year. Store away £20,000 in a Santander 123 Current Account and that figures rises to £456.

All you have to do is set up that direct debit for the minimum repayments and remember to pay the remaining debt back when the 0% deal ends. Surely that’s worth the effort?

Is stoozing worth the risk?

Of course, if you forget to put the money back onto your credit card before the 0% period ends, you’ll have a mountain worth of interest to pay back on top of your balance.

And if you spend the extra money that stoozing provides instead of storing it away, you could end up in severe financial trouble.

But surely you don’t have to be a financial journalist working with dozens of money experts to be able to avoid these hurdles?

Are you a fan of stoozing? Or are you put off by the risk/reward ratio?

Is stoozing worth the hassle?

No (39%, 125 Votes)

Don't know (31%, 97 Votes)

Yes (30%, 95 Votes)

Total Voters: 317

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In a complex world sometimes I try not to get too clever as it just means an extra concern and something to keep track of. Am I just lazy or is it I prefer a simple straightforward existence.?!

Having said that I am and have used 0% offers to allow me to flex my long term planning as in 12 to 18 months ahead . To be honest for a £80 gain in a year simply not worth the hassle.

smike says:
28 August 2014

does no one ask themselves whether using this loophole unintentionally provided by the credit card company is ethical?

perhaps not.

Josh says:
11 March 2016

And credit card companies, who profit off getting people into crippling debt at disgraceful interest rates are ethical!?

smike – It is not unintentional. They have access to vast swathes of money at ludcicrously low rates and will make a turn when I pay them effectively 2.49% p.a. They are probably borrowing at around 1% to 1.5% from depositors.

I have seen offers with no arrangement fee at all but I suspect they will be for quite small sums to gain new customers.

Well, it’s not my idea of a good time.

Isn’t it just simpler to use a cash back credit card and pay it off at the end of each month?

You still ‘earn’ money and there aren’t any major pitfalls like forgetting to save enough to pay off the loan.

It also just keeps on giving.

trev nicholls says:
30 August 2014

Complete waste of time and effort. Just get a “cash back” card and pay of the balance each month by Direct Debit. Ask yourself the question ” are Credit Card providers in it for “0” return?” No brainer answer is no. They offer these deals because they hope/know that more customers fail to comply with the rules than actually do comply. Hence making immoral amounts of profit. You could default by simply forgetting, being ill etc. your only human.

Your only human? My only human too…

Dibbler says:
1 September 2014

o Is Stoozing worth it? Not as much as it used to be due to the poor savings interest rates around at the moment.
o Is it worth Stoozing at better rates than the interest rates available today? I think so.

The offset mortgage variant of Stoozing is a more interesting proposition with SVR rates are around 4%.
I knocked several years (and therefore a decent chunk of interest) off my last mortgage with a Stooze pot that reached about £50k, hoping to do similar again in the near future… It took me maybe an hour or two per month to make sure I paid money back on time (and made me think about where my income was going each month).

It’s not for everyone, but it can be part of a good moneysaving strategy.

Not heard the term ‘stooze’ before, but I did it when, as you say, interest rates were reasonable. Now they’re not, I don’t bother.

I have done this and made some money but you do have to be careful to pay back on time . Also over the long term , to keep profiting, you need to keep getting new cards (as deals come to an end )and that can damage your credit rating. It can be easy to get greedy and apply for too many. Card applications need to be decently spaced apart , and that can be difficult to judge. If you not self disciplined enough and can’t trust yourself to keep on top of it it’s probably best left alone.
I do prefer a decent cashback card – easier.

Dibbler says:
7 September 2014

But… the Santander 123 cashback card comes with 18 months 0% spending. So, cashback and Stooze card – very nice!

I have done this for many years and, even in these times of low interest rates, I think of it as some small recompense for the poor returns offered to savers . Unless you can trust yourself to be disciplined and pay the full balance off at the right time, then stay away from it. You do have to keep changing your cards, but so far I’ve had no problem with it affecting my credit rating.
The ideal for me is a card that also has a long 0% for purchases period and cashback or other useful points . There are a few out there – Tesco and M&S cards are current examples.