Successful Stoozing: A Guide
The introduction of 0% balance transfer deals brought a new financial practice which allowed people to use those deals to make money. The practice is known as 'stoozing' and it is closely related to credit card jumping. The difference is that successful stoozers have to be debt free, otherwise any gains made by stoozing will be lost in paying interest on credit cards.
How Stoozing Works
Stoozing works like this. The would-be stoozer opens a high interest savings account. Some people recommend that this should be an account that can be managed online for ease of administration.
At the same time, the would-be stoozer applies for a new credit card with a 0% balance transfer deal. This is not just any balance transfer deal, but a super balance transfer deal. A super balance transfer deal allows borrowers to transfer money to their bank accounts without incurring a fee. An alternative to this is a credit card provider who supplies fee-free credit card cheques.
Transferring The Money
Once the savings account is opened and the credit card has been secured, the stoozer uses the entire credit limit on the card and transfers that amount to the high interest savings account. The money will earn interest for the stoozer during the preferential balance transfer period. This can be anywhere from six months to a year.
While this is happening, the stoozer uses his or her bank account to make the minimum payment due on the credit card while the interest on the money in the savings account continues to add up. At the end of the preferential period, the stoozer repays the outstanding debt on the credit card and pockets any interest made.
Another option is to apply for a new 0% credit card at least six weeks before the end of the interest free period on the first card. When the card arrives, the stoozer uses that card to repay the debt on the first card, leaving the money from the first card in the savings account.
The Art Of Stoozing
In many ways, stoozing is similar to taking advantage of the 0% interest deals from major retailers. Many people use these deals even when they have the money to pay for the purchase. This means that they can earn interest on their money instead of paying a lump sum straight away.
Stoozing will only work with interest free credit card deals and fee free balance transfers. The secret to successful stoozing is to be organised. Organization is even more essential for those who use this strategy with two or more credit cards. This increases the potential gains, but is also riskier.
As long as the required repayments are made on time, the stoozer's credit rating should remain good. However, any missed payments or delayed balance transfers will put it in jeopardy. Stoozers also need to make sure that they don't make too many credit card applications within a short space of time. This can serve as a red flag to potential credit card issuers.
Current No Fee Balance Transfer Offers
Related Links
- Choosing & Using - Free advice from the UK government on many credit card matters
- Money Laid Bare - Free advice from the new FSA website
- Stoozing website - find all the free balance transfer deals.
- Quick Balance Transfer Guide
Balance transfers allow card holders to transfer the money they owe to their existing credit card to another, usually at a special rate of interest. The new credit card company pays off the old credit card debt and transfers it to the new card. This article will tell you how to play the game.
- The True Cost of Balance Transfers
Balance transfers are a great way to consolidate credit card debts into one place, especially when there are many 0% deals available. However, there are hidden costs.
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