What is Credit Card Stoozing & How Can You Use It?

by David Bakke

cc appThe following is a guest post from my good friend Mark Brown.

Mark Brown writes about personal finances for an Australian comparison website where you can find the best credit cards and compare everything from balance transfer credit card offers to cards for frequent flyers.

While the name might sound somewhat silly, if you are on the ball when it comes to your money and you are willing to invest a little time, stoozing can be a lucrative investment strategy. While this doesn’t mean stoozing is for everyone, and not without risk, there are certain benefits to stoozing of which you might be unaware.

Here is a brief explanation of what stoozing is, what you’ll likely need to get started with the process, how to be more successful at stoozing, as well as some potential problems or pitfalls.

What is Stoozing?

Without going into great detail, stoozing is the process of making use of 0% credit card rates to transfer funds from the credit card company into a bank account and earn interest off that money during the term of the 0% rate. Sounds easy, right? Well, not so fast. There are more factors to consider than just sliding some money into your account, making a quick buck, and giving it back.

  1. Not every card provides the essential aspects needed for successful stoozing. You’ll have to find a card that offers a 0% introductory rate and determine how long that rate is good for, as well as whether that card pays off existing debt only in a consolidation process or will actually allow you to transfer funds into a bank account.
  2. You must be approved for the card necessary for stoozing; otherwise, it does you no good.
  3. You’ll need to find a bank account that offers a decent rate of return on your money, which may be easier said than done.
  4. You’ll likely need to determine whether you will want to move a lump sum transfer from a card to a bank account, or instead use a 0% rate card to make your usual monthly purchases (being sure to make minimum payments and pay off the balance before any interest is accrued), and take the cash you would have spent on those purchases and place it in an interest bearing account.

So let’s say you find all these precursors to the program. What else do you need?

What You Need For Effective Stoozing

Probably the most important thing you’ll need for effective stoozing is attention to detail. Watching out for and understanding credit card terms and fees is critical to the success of your stoozing. Getting a credit card that enables you to transfer cash to your bank account, only to find the transfer fees are three times the return you’ll get upon your account, probably won’t do you a much good. Sites like Stoozing.com or Whatsthecost.com may provide helpful calculators and information that can enable you to run your numbers in advance of making a decision on certain cards or accounts. Doing so can provide you with a better idea of what your choices will earn you, and this way you can run various scenarios without putting your money at risk.

What to Watch Out For

There are plenty of ways to get burned when stoozing, and snoozing when you’re stoozing can cost you big time. Besides the obvious transfer fees or earning too low a rate on your bank account, there are other potential pitfalls as well. Not paying back the full balance on your card or not making the minimum monthly payments (depending on your stoozing strategy) can make stoozing a loosing proposition. It is also important to bear in mind that if you decide to go the monthly purchase route, if you end up spending more that usual due to having the credit card available, you may be negating the profits you could have made from stoozing.

{ 1 comment }

1 Paul April 24, 2012 at 3:25 pm

What you really need for effective Stoozing is good interest rates… That’s the problem! I am ‘stoozing for leverage’ or using some funds on the stock market. The way I see it is that if you can transfer a cash debt around, you can transfer a shares debt.. That is if your in debt, you might make some money! …. Its what the banks do and what harm did it ever do them!! 😉

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