Stoozing: the money hack that can make the most of higher interest rates

If you’ve got spare money to save, then higher interest rates are obviously good news. And even if you haven’t, thanks to a trick known as stoozing, these rates could still be a way to earn extra cash.

Stoozing involves borrowing at zero per cent for a few years, usually via a credit card, and saving this cash at a decent rate for the same time. Just before the interest-free offer ends, you move the money held in savings to clear the debt. Any interest earned in that time is profit.

For example, with it possible to get 5.12 per cent on up to £5,000 via the Barclays Blue Rewards Rainy Day Saver there’s the potential to make £256 over a year. Easy money!

But, of course, it’s not that simple. For a start, credit cards come with credit limits, and you might find you are only offered a relatively low amount. You might decide it’s not worth doing it if you’re only getting a grand or two.

The type of zero per cent card makes a difference, too. If you’re wanting to stooze a lump sum, you will need either to balance transfer an existing credit card debt or use a money transfer card, and that could come with a transfer fee that will eat into the profit margins.

It’s more likely that you will be stoozing using a zero per cent purchase credit card for all your usual spending, and moving the money you would have spent into an easy access or regular savings account.

You will want to do this as soon as possible after spending, not only to maximise the time earning interest but also to ensure you don’t forget.

Fail to transfer all the equivalent cash over and there is a risk you lose track of how much you have to spend – and maybe end up double spending.

And, of course, it is vital you have all the money needed to clear the full debt at the end.

If you don’t, you will begin paying what will probably be hefty interest on the balance left over.

You can’t just ignore the credit card debt until the whole thing needs clearing, as the minimum repayment will still be required.

Setting up a direct debit to do this automatically will help you avoid any consequential charges.

There’s also the potential impact on your credit report to consider. Other lenders you apply to won’t know you’re stoozing and have the cash available in savings.

They will just see a large credit card debt. If you have any essential credit applications on the horizon, especially mortgages, then it’s probably advisable for you to avoid stoozing completely.

But if you follow the rules, you’ll find this method will make you more cash than using a cashback credit card.

If you’re planning to Stooze on everyday spending you will need a zero per cent purchase credit card.

The longest time period available on cards at the moment is two years, though watch out for any that say ‘up to’ as you might get significantly less.

It’s worth using a comparison site to check your eligibility across a large range of cards before choosing which one to go for – you might even find some where you’re pre-approved.

If chances are strong for the Barclaycard Platinum (up to 24 months) there’s currently an extra £20 available when you sign up and spend £250. And if you apply via cashback sites Quidco or Topcashback there’s an extra £19 back.

Another card with money back from Topcashback is the Tesco Purchase card. You’ll earn £25, though it’s only up to 14 months.

And if you shop regularly at Sainsbury’s you’ll get a bonus 500 Nectar points on each £35 spend in the first two months (up to 5,000 points) via its up to 24 months card.

But if you are worried about getting a shorter time at zero per cent, then there’s a guaranteed 24 months via M&S Bank, plus you will be able to earn points on your spending.

Andy’s Best Buys: 0% purchase credit cards with extras

If you’re planning to Stooze on everyday spending you will need a zero per cent purchase credit card.

The longest time period available on cards at the moment is two years, though watch out for any that say ‘up to’ as you might get significantly less.

It’s worth using a comparison site to check your eligibility across a large range of cards before choosing which one to go for – you might even find some where you’re pre-approved.

If chances are strong for the Barclaycard Platinum (up to 24 months) there’s currently an extra £20 available when you sign up and spend £250. And if you apply via cashback sites Quidco or Topcashback there’s an extra £19 back.

Another card with money back from Topcashback is the Tesco Purchase card. You’ll earn £25, though it’s only up to 14 months.

And if you shop regularly at Sainsbury’s you’ll get a bonus 500 Nectar points on each £35 spend in the first two months (up to 5,000 points) via its up to 24 months card.

But if you are worried about getting a shorter time at 0 per cent, then there’s a guaranteed 24 months via M&S Bank, plus you will be able to earn points on your spending.

Barclaycard Platinum

0% for up to 24 months

Extra £20 cashback when you spend £250 in first 90 days (ends November 30)

M&S Bank Shopping Plus

0% for 24 months

M&S points on spending

Sainsbury’s Bank Dual 24 Month

0% for up to 24 months

Up to 5,000 bonus Nectar points via shopping at Sainsbury’s

For more details on these and other credit cards head to Be Clever With Your Cash.

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