Have you ever heard the term ‘stoozing’? I hadn’t either until a little while ago. It’s apparently the name given to using zero percent finance as a source of borrowing.
Stoozing is the latest in the current need to name everything rather than describe it.
Many of us would just call this ‘using 0% credit cards for cheap borrowing’ but nowadays everything must have a name. Even if it’s a nonsense name.
So back to the topic at hand.
Stoozing.
What is stoozing?
As I just described, stoozing is using 0% finance as cheap borrowing. Most of the time, that means 0% credit cards as that’s usually the only type of 0% finance around.
If you have access to other types of finance, it can mean that too.
As it’s mainly credit cards we can use right now, let’s concentrate on those.
You can use 0% credit cards either to transfer balances from other cards or to buy things you need.
For the former, you’ll need a 0% balance transfer credit card. For the latter you’ll need a 0% purchase credit card.
They may sound the same but they are very different types of cards!
0% balance transfer credit card
A 0% balance transfer credit card enables you to transfer debt from other credit cards.
You would use this if you have balances on other cards that charge interest.
Transfer all balances onto your 0% balance transfer credit card, pay it off as quickly as you can and you minimise the amount of interest you pay.
0% purchase credit card
A 0% purchase credit card works slightly differently. This card has a set period where you pay 0% on any purchases you make in that time. Once the period ends, you pay standard interest.
Some 0% purchase credit cards can have interest free periods of 3, 6, 12 or even 24 months.
Stoozing using a 0% balance transfer credit card
Stoozing using a 0% balance transfer credit card is very straightforward but does require willpower.
It’s a great way to clear credit cards without paying interest and is ideal for those with a significant balance on their cards.
It goes a little something like this:
- Open a 0% balance transfer credit card
- Note when the 0% period ends and set a reminder for a month before
- Transfer all your credit card debt to the 0% card
- Pay off any existing credit card debt if you have any left over
- Pay off your 0% credit card as quickly as you can
- Open another 0% balance transfer credit card if you still have debt to pay off
- Rinse and repeat until you’re debt free
That’s basically how to stooze using a 0% balance transfer credit card.
Transfer all your other credit card debts that charge interest to the 0% card, pay off anything that’s left over and then pay off the 0% card.
Try not to spend anything while you’re doing this and definitely don’t spend on the 0% card as you’ll be charged interest!
Stoozing using a 0% purchase credit card
Stoozing using a 0% purchase credit card is much simpler to do. All you need to do is plan when you’re going to be making purchases on the card.
- Find a 0% purchase credit card with the longest interest free period
- Set a reminder for just before that period ends
- Set up minimum payments to service the card
- Use the card for purchases throughout that period
- Put the equivalent of what you spent into a savings account
- Pay off the card just before the 0% period ends using those savings
Again, using a 0% purchase credit card requires willpower. Otherwise, it’s a very simple process.
Only spend what you would need to spend and send the equivalent payment into an interest paying savings account.
Set a reminder for just before that interest free period ends and pay off the balance with savings.
Hopefully you would have made a little money from savings interest and not paid an interest on what you borrowed.
Stoozing using other methods
The current climate has meant there are very few interest free finance options around right now.
However, when things change, you can stooze using interest free finance for anything. You can use it for cars, kitchens, technology and any big ticket item you might buy.
As long as you would have bought it anyway, using interest free finance is a great way to use someone else’s money to earn a little for yourself.
Remember to send the equivalent amount to an interest-paying savings account until the interest free period is almost over and you may have earned a little extra cash.
What to watch out for if you plan on stoozing
Stoozing is largely a low risk form of borrowing without paying the high rates of interest charged on cards.
There are a couple of things to look out for though.
The dreaded ‘up to’ clause
You’ll notice credit cards use ‘up to’ a lot in their marketing. Credit limit ‘up to’ £10,000 or ‘up to’ 24 months interest free.
To be fair to the card providers, they must put that caveat there as they don’t know your credit history or score.
If they offered everyone the same benefits it would increase their risk exponentially, so they don’t.
Even if a card says ‘up to’ £10,000 credit limit, you might not get that. The same for the 0% purchase period.
This can cause issues if you have a lot of credit card debt as you may not get the kind of limit you need to make this work.
I would recommend checking eligibility before applying and making the best of what you can find.
Your credit score
Stoozing means accumulating debt. Even if it’s 0% debt, it’s still debt. It will count as that on your credit score too, which will likely have a negative impact.
The amount of debt you have is part of what makes up your score. Future lenders will see that you owe a lot and may be hesitant about offering more credit.
There is no marker for stoozing. All future lenders will see is a lot of credit card debt.
If you’re planning to get a mortgage or large loan anytime soon, consider carefully whether it’s a good idea or not.
Is stoozing a good idea or not?
Is stoozing a good idea or not? I would say yes, if you manage it properly, are disciplined about paying it off and you time everything right, stoozing is a good idea.
I personally think 0% balance transfer stoozing works best, but all methods can work.
If you have significant credit card debt, 0% balance transfer stoozing is a simple way to pay less interest and more off what you owe, which pays off your debt faster.
That must be a good idea, right?
