Credit card stoozing is a term given to a simple process by which you can make money from credit cards and high interest bank accounts, all that is required is a bit of time, effort and an understanding of your rights and responsibilities as a credit card holder.
So what is credit card stoozing?
Credit card stoozing is the process by which an individual takes advantage of the difference in interest rates between a credit card and that of a high interest bank account to make money.
All that is required is a credit card that offers 0% balance transfers or introductory low rates on cash advances, which can then be placed in a high interest bank account that has a higher return interest rate, in turn – making you money.
Here is a quick example:
- Credit card gives you $8000 at 0% interest for 6 months
- High interest savings account gives you a 6% p.a. return
- Over 6 months you will have earned $243.02 in interest
- At the end of 6 months, you immediately pay back the full $8000
- Credit card annual fee of $49 to be deducted from earnings
- Total potential profit of $194.02
Some people even do this but with 10-12 credit cards apparently!
This method seems too good to be true and in many cases is. Banks are very clever and understand that this process occurs so have many safeguards in place to protect them.
Credit card stoozing is definitely not for everyone, it is risk free for someone who is financially aware, attentive and able to handle complex timing and money issues. If this doesn’t sound like you, I suggest you stop reading this article right away!
Risk factors to keep in mind
- The annual fee of the credit card and its impact on your returns
- The monthly repayment schedule, when and how much?
- Whether or not interest accrues on the outstanding amount regardless of minimum payments
- Never ever forgot your repayments, it will ruin the system
My personal experience with credit card stoozing
Martin Lewis from the UK recently wrote about this process, which got me thinking – is it possible for me to do it?
I ended up getting an 18 month balance transfer from Citibank for $20,000 at a low rate of 2.9% p.a. and a Raboplus high interest account with a rate of around 7%.
The end result was that I did make some money, but it was rather complex and hard to do and definitely something I wouldn’t do again. In fact, any debt on credit cards scares me!
Stoozing tools I used:
- Citibank Gold Card
- Raboplus high interest account