Stoozing – make free cash from debt
Earn interest from 0% spending credit cards
Stoozing is the art of creating an unneeded debt to make money. In a nutshell, you take out a 0% credit card, then save the money it gives you at high interest. And with savings rates far higher than a few years ago, and 0% cards getting longer again, it's now possible to make £100s or even £1,000s a year doing this.
This guide was originally written by Martin Lewis; it's now updated by the MSE Money Team.
What is stoozing? How does it work?
Stoozing is a way of manipulating 0% spending credit cards to make money. You take out a long 0% spending credit card and use it for your normal spending, then put the unspent money from your bank account into a top savings account – so you earn interest.
Many have made £100s or even £1,000s a year doing this. Martin won't let us mention it without what he calls the MoneySaving poetry from the earlier days of this – when former card firm Egg was lending him money at 0%, which he then put in Egg's own high-interest savings account paying him 6%!
Back then, some even had £80,000+ in their 'stooze pot' making gains of £5,000+ a year, and we're creeping close to those times (do let us know if you've a big stooze pot).
Warning. Stoozing requires discipline - it's ONLY for the debt-free, financially savvy. If in doubt, don't!
Though lucrative, this technique isn't suitable for everyone. If you're not very financially organised, unsure of how it works, have a poor credit history, don't have financial self-discipline, or have other credit card, overdraft or loan debt, this ISN'T for you.
If you decide to give it a go, read this article in full and make sure you fully understand the process, as mistakes can have a high cost. Three quick checks:
You must be credit card debt-free. Only do this if you don't have any credit card debt and have a decent credit history. Those who already have debts should use all available new credit to reduce the interest. See Best 0% balance transfer credit cards for full help.
You must be financially savvy & organised. Do it right and it's risk-free. Yet it's not for the forgetful or ill-disciplined. If that's you, stop reading now, as getting it wrong costs.
Consider cashback instead. For a simpler way to make free cash you can try a Reward credit card that pays cashback, that you pay off IN FULL each month.
Stoozing Golden Safety Rules
Get this wrong and it can cost you large, so always make sure you follow these rules:
1. Always pay the monthly minimum. Set up a Direct Debit to repay the monthly minimum and don't bust the credit limit, or you can lose the 0% deal.
2. Don't use these cards for anything other than spending. Only use your stoozing card(s) for your everyday spending – never make cash withdrawals or shift debt to it, as you could find yourself unnecessarily paying hefty fees and interest.
3. Clear the card or balance transfer the debt before the 0% ends. Make sure you pay off the debt before the 0% period ends or transfer it to a low or no-fee 0% balance transfer card. If you don't, the interest rate will jump to around 25% APR (or more), killing any gain.
4. Do not take risks with the stooze pot. If you do, you could find the debt you have deliberately manufactured becomes real debt.
5. Stoozing debt is still a debt, so impacts your creditworthiness . In credit score terms, you're still borrowing money, so it impacts your credit worthiness while you have the debt. But the magnitude depends on the size of the debt. If you've an important application like a mortgage due, bear that in mind.
How to stooze safely to make £100s or £1,000s
The idea is to do your normal spending on an interest-free credit card and let the dosh you'd normally be using build up in a savings account, earning interest.
This requires discipline, and is absolutely NOT a way to spend more than you would have – it's a money-making recipe. So don't overspend and never breach the card's credit limit.
Step 1. Get a long 0% spending card
The key to stoozing is how you get the debt off the credit card into your savings account. There used to be a couple of different ways, but a change in credit card offers now means, by far the most lucrative route is via a card you can do new spending on without paying interest.
Get the longest 0% credit deal you can. Use our 0% Spending Eligibility Calc to see which cards you're most likely to get, without impacting your credit file. We've listed the top picks in the table below, or if see Top 0% spending cards for full info and options.
Don't confuse these with 0% balance transfer cards, which are for shifting debts.
Bank | Why choose it | 0% period | |
|---|---|---|---|
Guaranteed longest deal with MSE eligibility check | DEFINITE 25 months 0% | CHECK ELIGIBILITY | |
Next-longest guaranteed deal, with MSE eligibility check | DEFINITE 22 months 0% | CHECK ELIGIBILITY | |
Longest 'up to' deal but 0% time varies & no MSE eligibility check | Up to 26 months 0% | ||
Long 'up to' deal and possible £25 cashback, with MSE eligibility check | Up to 24 months 0% | CHECK ELIGIBILITY (Existing HSBC customer? Use this link) |
These are our top few cards – see our full review for more options.
Step 2. Do ALL normal spending on the card
Do all your normal spending (and possibly your family's too) up to your credit limit on your 0% spending card - but this isn't a reason to spend more. All you're effectively doing is using the card instead of money in your bank account, so you build up the 0% debt.
You will still need to make the minimum monthly repayments – 0% interest doesn't mean nothing to repay. And this is a rare occasion where the right tactic is to only repay the minimum. Don't try to repay this card in full, but do set up a Direct Debit to make the minimum monthly repayments (usually around 2% of the outstanding balance). If you miss a payment, you could lose the 0% promo offer, messing up your entire stooze.
Step 3. Put the unspent money from your bank account in top savings
As you've spent on your credit, not debit, card this should build up a mirror amount of unspent income in your current account. So each month sweep that into the top easy access savings which can be up to 5%. Do it as easy access, as while we've never heard of it happening to a stoozer, technically the card debt can be called in at any time, so you always want the money handy.
Or, for the few people who have a flexible or offset mortgage, you may be better off putting the stooze cash in to this to minimise the interest (most mortgages don't allow this, and don't confuse it with overpaying – it's not the same thing). As a rule of thumb, if your savings rate is higher than your mortgage rate, then save. If your mortgage rate's higher than what you can get on savings, then offsetting will likely be a better use of your stoozed cash.
Step 4. You could stop there or prolong or even increase the stooze...
In the MONTH BEFORE THE 0% period ENDS, either use the money in your savings to clear the 0% debt before any interest is charged, or shift the debt to a cheap 0% balance transfer card to keep earning interest on the savings. Aim to get the lowest fee possible (a fee-free one's best to maximise the gains).
Of course, with a decent credit score and careful management, you can do this with more than one card and build your stooze pot, so you're earning more.
How much can you make from stoozing?
Here's an example of how much you could make from using this technique:
How Sally Stoozer made £420 in free cash...
Sally Stoozer gets a 25-month credit card with a £5,000 limit. She usually spends £1,250 a month, and puts all that spending on the card. She moves an equal sum of money from her bank account to a 4.5% easy-access account each month, while paying just the monthly minimum on the card (via Direct Debit).
A little after four months Sally has nearly £5,000 in there, which builds in interest while she makes the minimum payments on the card from another account. The month before the 0% period on the card ends, she pays off the remaining balance and, after paying herself back for the minimum payments she's already made, has around £420 profit left in the account.
Or, for a real-life example, Leigh recently emailed us a big win:
I started using MSE in 2009, I've been reading the weekly email every week since. Over the years I've done virtually everything that is suggested on the website. My personal favourite is credit card stoozing which has saved us £1,000s over the time we've been doing it by persistently holding five figure sums at 0%. We currently save over £600 every year with just 2 cards. A massive thank you to Martin and the team!
Will stoozing impact your credit file?
Most lenders' scoring systems aren't sophisticated enough to detect that you're playing this free cash gain. Yet multiple, clustered applications, and high outstanding debts, even at 0%, will diminish your ability to get competitive credit, so always spread card applications out.
If you have a mortgage or important credit application coming up, a credit card debt (especially if it's maxed out) could affect lenders' affordability checks, so you might want to hold off on stoozing.
A note for the curious: where does the term 'stoozing' come from?
This isn't a fly-by-night system. Martin first broadcast a strategy for this in early 2000, as 0% credit card interest rates began. Many who started back then now report thousands in total gains. As the number of 0% cards increased, so did the number of people taking advantage. The now-commonly used name is ‘stoozing', used to describe any technique to profit out of playing credit card companies deals.
We gather that a couple of years after the technique started, the term started to gain common usage in the discussion forums of ‘the Motley Fool' website, due to a contributor there called Stooz. Yet regardless of whether it's ‘free cash' or ‘stoozing', either way, hopefully it'll be cash in your pocket.
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