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When building my credit score at the age of 18, I thought I was an absolute magician when I realised I could get a 0% on a purchases credit card, pay off the minimum payment each month, invest the remaining amount and then pay off the amount in full at the end of the term – thus keeping any interest I had earned over the years. I later found out, this term was called ‘stoozing’ and over 10 years later this is still a regular tactic to improve my credit rating and profit off interest-free loans.
I evolved my spending at 18 from simply spending everything on a credit card, then paying in full each month, to turning profit from interest loans. By completing the former, I built my credit rating which allowed me to build up to the Premier League …. 0% purchase cards.
There are many 0% on purchase cards available and I predominantly use the selection from the regularly updated: https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards/
So what is ‘Stoozing?’ exactly, and how can I turn a profit?
Stoozing is a strategy that can help you maximize your savings and make the most out of your credit card. It involves using a credit card to make purchases and taking advantage of the interest-free period offered by many credit card providers.
Here’s how it works:
- Choose a credit card with a long interest-free period. Look for a card that offers 0% interest on purchases for a period of 12 months or more.
- Make purchases using your credit card and pay off the balance in full before the interest-free period ends. This way, you won’t be charged any interest on your purchases – which is normally 29% +!!
- Place the money you would have spent on the purchases in a high-yielding savings account. This will earn you interest on the money that would have otherwise gone to paying off the credit card debt.
- Repeat the process. Whenever you make a purchase using your credit card, place the money you would have spent in a savings account. Over time, the interest you earn on the money will accumulate, allowing you to make the most out of your savings.
It’s important to note that stoozing is not for everyone. It requires discipline and careful management of your credit card usage. If you have a tendency to carry a balance on your credit card, this strategy may not be for you.
Additionally, it’s crucial to make payments on time and in full, as late payments and missed payments can impact your credit score negatively.
One of the most accurate ways I track my accounts is by documenting the card name, credit limit, start date, and end date of the 0% on a spreadsheet. I will then create a calendar invitation the month prior to remind me to pay off the full amount. Remember, if you go over your credit limit or on some cards miss a minimum payment, you will lose your 0% offer and will go to their standard 29%+ interest rate.
In conclusion, stoozing can be a great way to maximize your savings and make the most out of your credit card. However, it requires discipline and careful management of your credit card usage. If you’re interested in trying this strategy, be sure to choose a credit card with a long interest-free period, make payments on time, and place the money you would have spent in a high-yielding savings account.
So where should I put the remaining money after I pay the minimum payment? Find out more in our ‘Top ways to invest small amounts of money‘ blog article.
