Here are three main ways to take the free money the credit card companies offer and make yourself a profit from it.
What you do is borrow money at 0% interest from a credit card company and stick it in a savings account to earn you interest. Then, just before your credit card’s interest-free period finishes, you pay off the debt using the money you transferred to the savings account and keep the interest.
This practice is known as ‘stoozing’, according to internet lore this is because it was widely promoted by a bulletin board user by the name of ‘Stooz’. Regardless of provenance the idea is a simple one and can be a decent money-spinner.
First let’s look at the simplest way to do this and then get a little more complicated. Whichever method you choose you need to be prepared and on the ball to avoid making any mistakes.
Check out our balance transfer best buys here‘Stooze’ No.1: Use Egg Money as a conduitFor this trick you need to take out two cards. One is the Egg Money card which is a cross between a current account and a credit card, the other card you need is any credit card offering a
0% balance transfer offer.
Step one is to do a balance transfer from the credit card to the new Egg Money account. This will leave you with a debt on the credit card and the Egg Money account in credit by the same amount. (You must of course remember to set up a direct debit to pay off the credit card’s minimum payment.)
Now simply transfer the credit balance from your Egg Money account, first to your
current account and then from there to a
high rate instant access mini cash ISA or
savings account. Bingo. You’re earning interest on borrowed money and not paying any!
What’s it worth to you?Let’s see how much you could make in a year by making a £3,000 balance transfer via an Egg Money account to a Mini Cash ISA and keeping it there for a year.
So as you can see from the table above, sticking £3,000 in a tax free savings account could make you £165 a year in interest. If you want to stop there then you should simply pay off the £3,000 credit card debt before the 0% deal expires and walk away.
Find a top Mini Cash ISA hereStooze No.2: Keep on switching your balances aroundOf course, if you like the trick above but you don’t want to stop with just one year’s tax-free interest then just as your credit card’s
0% balance transfer offer is about to expire, take out another card offering a balance transfer offer and use it to pay off the first one.
Doing this means that you can keep the £3,000 (or more) you originally borrowed in a savings account earning interest. Keep doing this year after year to rack up progressively bigger amounts of interest. The more cards you use... the bigger the potential moneyspinner - but the bigger the admin headache.
| Total debt at 0% | One year at 5% | Two years at 5% | Three years at 5% |
| £3,000 | £150 | £310 | £470 |
| £5,000 | £250 | £510 | £790 |
| £10,000 | £500 | £1,025 | £1,580 |
| £20,000 | £1,000 | £2,050 | £3,150 |
The best rates of all are to be had if you are an
offset or current account mortgage holder who can pay out money from their mortgage whenever they like. Simply reduce the balance of your mortgage by using your borrowed money for as long as the 0% offer lasts.
Stooze No. 3: Use a regular savings accountA variation on this is to pay some of the borrowed money into one of the
regular savings accounts now on the market. You can get rates of as much as 12.5% on deposits of up to £250 a month. That’s a nice little turbocharge to your savings.
NB: Points to remember
1.Diarise the various end of balance transfer offer dates.
2. You will have to pay balance transfer fees which will reduce your gains.
3. Make sure you can afford all the minimum payments on the cards you take out.
4. Make sure you set up direct debits to pay all the minimum payments.
5. Make sure your new direct debits will make your first minimum payment.
6. NEVER spend any more on any of these cards.
7. Do not lie in any applications or if asked direct questions.
