Personal finance expert Martin Lewis has highlighted a clever money trick called "stoozing" that could earn savers "thousands" of pounds each year. The technique involves using a 0% interest credit card alongside a high-interest savings account to generate returns.
How stoozing works
Stoozing is a slang term in the personal finance world for a way of maximising the benefits of having a 0% interest credit card. The method involves taking out a 0% interest rate credit card on the longest possible deal you can find, as well as a high-interest easy access savings account.
Stoozers then do all their normal spending on the 0% credit card, with funds you're paid put into the savings account to match your credit card spend. Top savings accounts can have rates as high as 5% or more, and with interest added to the funds in this "mirrored" account, savvy savers can build up significantly higher sums than the credit card balance.
Pay off and profit
In the last month of the 0% period, you can pay off the credit card, with the interest from the savings account left over. MoneySavingExpert.com, the personal finance website Mr Lewis founded, says people have managed to make thousands of pounds doing so.
Alternatively, you can move the credit card debt to a low-cost 0% balance transfer card and continue the process, building interest in the savings account further.
Who should avoid it
The MSE guide was originally written by Mr Lewis and is updated by his team. It notes that he once did it himself using Egg's 0% credit card and high interest savings account, showing it may be possible to pull it off using a single bank's available financial products.
However, the website stresses that while the technique can bring big returns it "isn't 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," it warns.
Those that do decide to try are cautioned that mistakes can be highly costly, and understanding the process is key. You can find out more about how stoozing works, and the risks and potential benefits of it on the MSE website.
