You first started stoozing at work. Then your boss caught you. You thought you were going to be fired, until he said he wanted to watch. Late one night you were stoozing at home. You thought your wife was in bed, asleep – but she wasn’t. She caught you, too. At first you thought she would be mad, but then said she wanted you to show her how to do it.
Stoozing can be fun, if you’re careful. It’s perfectly legal, but addictive. Want to make a little money on the side? Let’s get started.
What Exactly is Stoozing?
Stoozing began in the UK back in 2004, when 0% promotional credit card offers were really hitting their stride. People would use the free money transfer options to stash cash in their savings accounts and accrue interest until the promotional term ended. Then they would pay off the card, find another card with a similar offer, and do it all over again. Wall Street calls it arbitrage.
Of course, the credit card companies figured out what was going on and started charging fees on transfers and cash draws. But diligent stoozers just adjusted their tactics.
Now they look for low-interest credit cards with 0% offers on purchases.
Before we go into the basics of stoozing, be aware that stoozing is a relatively new and underutilized practice in the United States, so there’s not a great deal of official information to be found on the Internet. However, we’ve compiled the best tips and tricks to help you stay ahead of the curve.
Step-by-step Guide to Basic Stoozing
Stoozing requires nerves of steel, acute organization, perfect attention to detail, and, most importantly, a superior credit score – that you’re willing to risk. But Danger is your middle name, right? Here is how to become a perfect stoozer:
- Find the right credit card – You’re looking for a 0% purchase offer for the longest period of time available. Remember, because of fees on balance transfers, we are going to implement our stoozing strategy with purchases, not cash. If you can find a card with 12-15 months or more of free financing on purchases, you’re set.
- Open a savings account – Now you want a high-yielding savings account. This can be a tough find. The more interest you make on deposits, the more lucrative your stoozing ventures will be.
- Spend – You’ve got this, right? Here’s the thing: we’re not talking about rushing out and buying a bunch of luxury items and acquiring debt. You want to use this card for normal purchases: groceries, gas, and lunch – whatever you normally buy with cash or a debit card. In fact, everything you normally buy, if possible.
- Feed the savings account – This is critical. Now you take the cash you normally would have spent on these everyday expenses and deposit it into your high-yielding savings account. Every penny. Every week. Each transaction you put on the credit card gets a matching deposit into the savings account. Rather than waiting until the end of the month and making a one-time deposit to account for these purchases, it’s best to get these deposits into the savings account as early as possible in order to begin earning interest.
- Pay the minimum – Each month you must pay the minimum on the credit card. You don’t want to default the promotional 0% interest rate by missing a payment or making a late one. Pay a few days early just to be on the safe side, or set up an automatic draft payment.
- Keep an eye on the calendar – This is also a top priority. You must know exactly when the promotional period ends, because before it does you have to…
- Pay off the credit card – Take the money from savings and pay off the entire balance of the card well before the promotional period ends. The remaining balance in your savings account is your profit from the interest that has accrued over the previous months. It might not be all that much, but it’s free money.
Don’t Be a Stoozer Loser
This can be a game of pennies on the dollar. But with a sufficient volume of purchases and those nerves of steel, the profits can add up. Here are the prerequisites for being an effective stoozer:
- A good credit score – You’re playing a dangerous game here. You’ll need a good credit score to qualify for the best credit card offers and you’re risking that score with just one mistake.
- Organizational skills – If you don’t have a keen attention to detail, this game may not be for you. A calendar, spreadsheet, and ironclad budget are tools of the trade.
- Discipline – Accounting for each credit card purchase with a matching deposit into the savings account takes discipline. Plus, you can’t touch the balance of the savings account because you’ll need that to pay off the card at the end of the promotional term.
Stoozing for Fun and Profit
Even Ethan Hunt can’t mount an impossible mission without the right tools and perfect timing. Razor-thin margins call for razor-sharp skills:
- The savings account you choose is critical. Fortunately, we are entering an era of rising interest rates, so this task will get a bit easier over time. Online savings accounts like EverBank and Ally frequently offer the best rates, but you will also want to check with a local credit union. As a not-for-profit financial institution, a credit union can offer higher interest rates than most banks – but you want to make sure that online transfers are simple and free. You’ll be making quite a few transfers into the account. And make sure you don’t have any withdrawal term limitations that might affect your ability to pay off the credit card at the end of the promotional term.
- Take some time to shop for the perfect credit card. With a top-tier credit score, current offers on credit cards with 0% interest on purchases range up to 18 months. Of course, you also want a card with no annual fee. And generous rewards points can be a big bonus for super stoozers.
- Frontloading purchases can enhance return. Though the plan is to make regular, everyday purchases with the credit card, it works best if the majority of charges occur during the first month or so of the strategy. The higher the balance in the savings account and the sooner it gets there, the more interest you’ll earn.
- Record-keeping is essential. You probably won’t be making the matching deposit into your savings account immediately after every credit card purchase. That means you will want to account for each purchase made between deposits. And you want to carefully monitor when the promotional period ends, especially if you are a Mega Stoozer and game the system with more than one card at a time. Sounds like a job for a good Excel spreadsheet.
- Protect your credit score. This can be a challenge. The strategy depends on you being able to open successive credit card accounts with favorable terms, cancel them at the end of the promotional term, and then do it all over again. Plus, in order to maximize your gain, you’ll be spending a large amount on the card – likely up to or near the credit limit. These are things that can really ding your score. You may be willing to take the chance, but remember it’s a risky business. (Another Tom Cruise film.)
There aren’t any stoozers on Forbes’ list of the world’s wealthiest people, as far as we know. At least they don’t list it as their main occupation. Stoozing can be a way to hedge everyday spending and may have more entertainment value than profit motive. But if you like living on the edge, tracking purchases and monitoring promotional periods, you may be a born stoozer.