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HOWTO Make Money from Stoozing

1. How much money could I make from Stoozing ?
Between £400 and £1500 per annum would be typical, but more is possible. It depends on how much money you can borrow from credit cards and what interest rate is being paid by your savings account. How much you can borrow depends on your credit rating, which in turn depends on many factors such as your earnings and what other debts you have.

For example if you borrow £30,000 from credit cards and save that in an account that pays 4.7% gross interest per annum, you will earn £1,410 before tax. For a normal rate taxpayer this would be approximately £1,100 after tax and for a higher rate taxpayer this would be nearly £850 after tax.

2. Can anyone make money from Stoozing ?
No, I am afraid not. To benefit from Stoozing, you have to be in the position where you do not actually need to borrow any money. So this means that anyone in debt can not make money by Stoozing. However, introductory rate credit cards can play a significant part in reducing debt by temporarily minimising (or eliminating) interest charges during introductory periods. See the Dealing With Debt board for advice on paying off your debts.
http://boards.fool.co.uk/Messages.asp?bid=50079

Even if you are not in debt, Stoozing may not be for you. There are many potential pitfalls for those who do not have an attention to detail. Before embarking on Stoozing you need to be honest with yourself. Do you have the time and inclination to manage your finances with great care ? Do you have an attention to detail ? Are you prepared to take the time out to read every line of your credit card’s Terms and Conditions ? Do you have a track-record of managing your finances well ? Are you prepared to devote some time to researching credit card offers, making the applications and moving money around within specific time deadlines ? If the answer to any of those questions is “No”, you may not have the right frame of mind for Stoozing.

Another area to consider, is how open to temptation you are. If you would feel in the slightest bit tempted to spend or gamble (including investing) the credit card money, then don’t consider Stoozing. It is imperative that the borrowed money is sitting there safely in a no risk account so that you can pay off the credit card when required.

Finally, how much do you care about your credit rating ? To maximise your ‘earnings’ from Stoozing, you will probably take on a lot of ‘debt’. While you know that you could pay off all the debt tomorrow because it is all sitting in a savings account, any future lender doesn’t know that. So if you care about your credit rating or can foresee that you will need credit in the near future, then forget Stoozing for the timebeing. The more debt you take on, the more likely that another lender will turn down a credit request. If such a rejection was just for another Stoozing card, then that would be fine. However, if the rejection was for a mortgage application for your dream home then that could be a bit more of a problem.

3. Are there any risks in Stoozing ?
Yes, there are lots of risks, but anyone with the right frame of mind and attention to detail can minimise or eliminate the vast majority of them. See the section “Can anyone make money from Stoozing” to help you decide whether you have the right frame of mind. Here is a summary of the risks.

(i) You spend some of the borrowed money and can not pay it back,

(ii) You damage your credit rating and can not borrow money in the future when you really need it,

(iii) you forget to pay off the full amount at the end of the introductory period,

(iv) you don’t know the exact date of the end of the introductory period (very easily done) so miss the date,

(v) a balance transfer from another card doesn’t not pay off the balance in time and you get charged interest,

(vi) a credit card application does not get approved in time,

(vii) you use your Stoozing card for purchases and get charged interest (You should not use your Stooz card for purchases. This is explained later),

(viii) you damage your credit rating when you need to apply for a mortgage or other important loan.

4. How does Stoozing work ?
In simple terms, Stoozing is borrowing money from credit cards that offer a 0% introductory period and saving that money in a savings account for the duration of the offer. At the end of the introductory period the credit card bill is paid off in full and any interest earned in the savings account is kept by the Stoozer. Rather than pay off the credit card directly from the savings account, the Stoozer would normally have another 0% credit card lined up to pay off the first one. Thus, the borrowed money could stay in the savings account for a considerable amount of time.

5. Could you give me a step-by-step guide to Stoozing ?
There are many detailed considerations which are covered in the rest of this FAQ, but the basic process is outlined below.

(i). Open up a good savings account that can be easily managed online and that pays a high interest rate.
(ii). Apply for 1 or 2 credit cards that offer a 0% introductory period for a good length of time. At the time of writing (July 2004), there are 9 month and 12 month offers around if you look carefully, but a 6 month period is perfectly workable. The longer the period of the offer, the less work you have to do to keep the ball rolling.
(iii). At least one of the credit cards should have a way of paying money directly into a bank account : either as a balance transfer or by a credit card cheque for which there are no charges (see “How do I choose a Stoozing credit card”). N.B. most credit card companies charge you for a credit card cheque but at least one does not. Choose carefully.
(iv). Ask each credit card issuer for the precise date by which you have to pay the complete balance in order to avoid any interest payments. Ideally you should get this in writing. If you get the information verbally, make a note of the date and time you called Customer Services and the name of the person you spoke to, so that you can refer back to it if necessary.
(v). Read all the Terms and Conditions of your new credit card(s) so that you understand exactly how the card operates.
(vi). Ask your credit card issuer to do a balance transfer from your bank account to your credit card. The request can usually be made by phone, online or by completing a balance transfer form sent by your card issuer. The credit card issuer will put the requested funds into your bank account. [This is referred to as a balance transfer FROM your bank account because the assumption is that you are transferring a negative balance from the bank account].
(vii). If the bank account that you specified in the previous step was your high interest savings account then the money is now where you want it – earning interest for you. If the account specified was your current account then you now need to move it into the savings account.
(viii). If you have a second credit card that can also pay directly into bank account then follow the above steps for this card too.
(ix). If you have a second credit card that only allows Balance Transfers from other credit cards (i.e. not from a bank account), then you need to route the money to your savings account via a card that does allow a bank transfer (e.g. your ‘Card 1’ mentioned above). The steps are (a) Ask card issuer 2 to Balance Transfer from card 1 to card 2 (this moves money from card 2 to card 1), (b) Ask card issuer 1 to Balance Transfer from your bank account to card 1 (this moves money from card 1 to your bank account).
(x). At this point you have moved the money from your credit cards into your savings account and these free ‘loans’ are earning you interest, so much of your work is complete. However, during the course of the 0% introductory period you must still make the minimum monthly payments requested by your card issuer. These can be made from your bank account or from your savings account.
(xi). About 2 months before the end of the introductory period of your card(s), you should start researching which cards you should apply for as replacements for your current card(s).
(xii). About 5 or 6 weeks before the end of the introductory period you should apply for your new card(s).
(xiii). As soon as you get your new card(s), ask the new card issuer to do a balance transfer from your existing credit card(s) so that you pay them off in full before the end of the introductory period. Keep a close eye on this. If there is any chance that the balance transfer will not go through before the end date of your introductory period, then cancel the balance transfer request and pay the existing cards off from the money in your savings account (known as your ‘Stooz Pot’). Whatever happens, you do not want to pay any interest at all.
(xiv). Once you have paid off your original cards, ask the card issuers to close the accounts and ask them to inform the credit reference agencies of the closure.
(xv). At this point you have moved your ‘debt’ from your first set of credit cards to your second set of credit cards while keeping all the money in your savings account. Ensure you that you adhere to the Ts & Cs of these new cards and pay them off by the end of their introductory periods, exactly as you did with the first set.
(xvi). 2 months before the new cards start charging interest, start researching cards for your next set … and so the process continues to repeat itself. And guess what ? Many card issuers will let you apply as a new customer if you have not had an account with them for at least 6 months, so if you closed down your old credit card accounts when they came to the end of their introductory period, then you can reapply for them in the future.

6. But is it legal?
Yes. You are simply taking advantage of introductory offers made by the credit card companies.

7. But is it moral ?
The question of morality is down to personal judgement. Some people feel that taking advantage of such an introductory offer without intending to be a long term customer is immoral. Others see this as perfectly legitimate. Yet others believe that making money from credit card companies has a certain poetic justice to it. Make your own judgement.

8. Will Stoozing affect my mortgage application ?
Yes. The more money you borrow, the more cautious your mortgage lender will be. They certainly will see how much money you have borrowed on credit cards and it will affect how much they would lend you. You would be advised to suspend your Stoozing at least 6 months before making a mortgage application i.e. to pay off all your Stooz cards and close them.

9. What do I need to look for in a Stoozing card ?
First and foremost, you need to find a card which offers an introductory 0% period on Balance Transfers. This allows you to move the money somewhere else so that you can earn interest on it. The longer the 0% introductory period the better, because it gives you more time until you have to start thinking about the next card and making another application and balance transfer.

You should always try to have at least one card that provides a route to make payments into a bank account.

Some cards also offer a introductory 0% on purchases. For the most part, this does not add very much to the Stoozer because as long as he/she can transfer out the whole balance, why would he/she want to make any purchases on the card. Besides, why not use a cashback card for any purchases and make money that way too ! The only time that a 0% on purchases is of use to a Stoozer is if they do not have a credit card that allows a transfer to a bank account. Using a 0% on Purchases credit card can allow you to build up the borrowed money over a period of time. Instead of paying off the card each month, the balance grows and after the end of the introductory period the balance can be transferred to a new card.
N.B. It is crucial that you know whether your card offers 0% on BTs, Purchases or both, because you need to treat them differently.

10. Where can I find the best Stoozing cards ?
Look for the balance transfer information at the following websites.
Moneysupermarket
http://www.moneysupermarket.com/Cards/credit_card.asp

(Edited by Admin: Copyright http://www.stoozing.com – Used with permission)

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