* An introduction to making money from credit cards * HOWTO make money using cashback cards * HOWTO make money using Stoozing cards Introduction to Making Money from Credit Cards
1. Someone told me that it is possible to make money from credit cards. Is this true ?
Yes it is true. Normally credit card companies make money from both consumers and retailers, but by being careful and following the guidance in this FAQ/HOWTO it is possible to use them to your advantage and to make money from them.
2. How can I make money from credit cards ?
There are two ways to make money from credit cards :
a. Cashback. This is where the credit card provider will pay you a small sum ('cashback') for each purchase using your card: typically 0.25% to 1% of each purchase. Cashback is paid out annually, either by crediting your account or by sending you a cheque. See below for our cashback guide. b. Stoozing. Stoozing is a way of making money by exploiting credit cards which have an introductory period during which no interest is charged. There is fierce competition in the credit card industry so many lenders have introductory periods of between 5 and 12 months during which they charge 0% interest on the card balance. This allows the Stoozer to borrow money for 'free' and to move it into a high interest savings account. At the end of the 0% introductory period, the money is withdrawn from the savings account and used to pay off the full credit card balance. The interest gained from the savings account is your 'profit'. An alternative way of making money from Stoozing is to put the borrowed money into an offset mortgage instead of a savings account. This reduces your mortgage payments, 'earning' you money in that way. See below for our Stoozing Guide.
3. How much money can I make from Credit Cards ?
Typically cashback might earn you between 50 and 200 per annum and Stoozing could earn you between 400 and 1500. These are not minimum and maximum figures: they could be higher or lower depending on your own circumstances and how much effort you are prepared to put in to the activity. The figures are intended to give you an indication of the potential rewards.
4. Can anyone take advantage of Cashback and Stoozing ?
No, not really. If you are in debt you should focus on paying off your debts rather than making money from credit cards. In fact, if you have credit or store card debt, then the cards will be costing you money rather than making you money. If you are in debt, you should select a credit card based on its ability to help you to reduce your debt levels. For example it would be unwise to select a good cashback card if it had a high interest rate. N.B. 0% introductory credit cards can help you repay your debts more quickly as part of an overall debt reduction plan, but this should not be confused with Stoozing.
Even if you are not in debt, Stoozing may not be for you. Please read the Warnings in the "HOWTO Make Money from Stoozing".
5. Can I make money from Cashback and Stoozing at the same time ?
Yes you can. However, you should use separate cards for each. The characteristics required from a Cashback card and a Stoozing card are very different.
6. Which of the ways of making money from credit cards is easier ?
Cashback is much simpler to operate than Stoozing and has little or no risk associated with it. Stoozing requires a much greater attention to detail and more effort, but the rewards can be much higher than cashback.
7. Do I need to consider anything else ?
Before you proceed, here is something to think about. If you have debt on your credit cards that you can not pay off in full each month, then you will not be able to make money from credit cards even if you follow the advice contained in here. In fact, the credit card companies will be making money from you.
HOWTO Make Money from Cashback
1. How does cashback work ?
Cashback is really quite simple. For each purchase you make using your credit card, the card issuer will pay you a small percentage back as a 'reward'. To make money from a cashback credit card you must pay it off in full every month, otherwise you will get charged interest. One month's interest could be greater than a whole year's cashback gains !
2. How much money could I make from Cashback ?
Between 50 and 200 per annum would be typical, but more is possible. It depends on two factors: how much money you spend on your credit card and what percentage cashback your credit card offers. For example an annual spend of 10,000 on a 1% cashback card will earn you 100. A 30,000 spend on a 0.8% cashback card will earn you 240. With one card currently available, someone spending 30,000 could get 540 cashback.
3. Can anyone make money from cashback ?
The only way to make money from a cashback credit card is to pay it off in full every month, otherwise you will be charged interest. Paying a credit card off every month means that (a) the card holder has to have sufficient funds available to make the full payment and (b) must be sufficiently organised to be able to make the payment on time.
4. Are there any risks associated with cashback ? There are relatively few risks from cashback providing you are organised and do not overspend. The risks are
i. You are tempted to spend too much because you believe it is earning you more cashback money. Having a cashback credit card should not mean that you spend any more money than you would previously have done, otherwise you will be worse off, not better off. ii. You can not pay the credit card off in full at the end of the month. If you find yourself in this position, you will be charged interest on the outstanding balance which could wipe out all your cashback earnings. iii. You make a late payment. If you make a late payment you will probably be charged interest and may also have a late payment fee. This would wipe out your cashback earnings.
5. What do I need to look for in a Cashback card ?
As you might expect, the main feature you should look for is a high percentage cashback rate. That may sound very simple, but it is complicated by the fact that some card issuers provide a flat rate for cashback, whereas others offer different levels of cashback depending on how much you spend on your card during the course of the year. Others offer an enhanced percentage cashback during the first few months.
So what does that mean to you ? Well, it means that if you want to maximise your cashback returns then you need to understand your spending patterns i.e. how much you are likely to spend on you credit card in the course of the year and whether you have any major expenses coming up soon that would make a card with a good introductory cashback rate beneficial.
If you track your spending using a notebook, spreadsheet or home finance package (e.g. Quicken or MS Money) then look back to see how much money you have spent on credit cards historically. If you don't track your spending, have a look back through a few months worth of credit card statements. If you don't even have a few months credit card statements filed away then ask yourself whether you have the discipline and control to be able to make money from credit cards in the first place.
Don't forget that with a cashback card you will be trying to maximise how much of your expenditure you will put through the card, so add a percentage increase on to your historical spending figure. [N.B. This is not advocating spending more money to earn cashback, merely putting a greater amount of your existing expenditure through a cashback card !]
What else do you need to look for in a card ? You should try to find a card with a credit limit that will comfortably take your peak monthly spend. For example if your normal monthly budget is 1000 but you might have a car repair bill (500) and pay for a holiday (1500) in the same month then you will need a credit limit of at least 3000.
As with any credit card, it is very important to understand the service and the terms and conditions offered by the card. For example, a 24 hour customer service centre and/or managing the account online might be very important to you or there might be a 'catch' in the terms and conditions which will make it difficult for you to operate the account.
Another consideration is how widely accepted your chosen credit card is. This is not a problem if you have a Visa or Mastercard credit card, but it is a consideration if your primary cashback credit card is an American Express credit card. Most major stores, hotels, garages, airlines and travel companies accept American Express, but small shops usually do not. If AMEX is you preferred cashback card, have a Visa or Mastercard cashback card as a backup.
6. Where can I find details of credit cards offering cashback ?
There are many sources of information about credit card offers. However, most financial websites also take advertising so sometimes you need to look a bit deeper for the best offers. Here are some websites to get you started.
Moneyfacts - http://www.moneyfacts.co.uk/cards/charts/cards_cashback.htm
Money Supermarket - Good site that also has unique offers from time to time. Select the 'cashback' option in the top panel, then click on proceed. http://www.moneysupermarket.com/Cards/credit_card.asp
Thisismoney - Website for the Daily Mail. The credit card pages link to moneysupermarket. The following goes straight to the cashback cards page. http://www.moneysupermarket.com/CardsP/CardsResults.asp?strSortMethod=0&CardType=Credit+Card&Feature shbackNew&AnnualFee=Any&strSMethod=0&CardOption≠ditCard&Next.x!&Next.y=4
7. How can I maximise my cashback 'earnings' ?
First of all, ensure that you understand your spending profile and choose a good cashback card (see above).
Secondly, be imaginative ! It might surprise you how many things you can pay for with a credit card. Most people would expect to be able to use a credit card for buying food at the supermarket or buying clothes and CDs etc, but did you know that some local authorities will let you pay your council tax by credit card ? Your utility suppliers will probably let you pay by credit card, although many offer a discount for paying by direct debit so that may be better than cashback. You can pay for your household and car insurances by credit card. The author/editor of this FAQ paid for a 14,000 kitchen on a 1% cashback card, earning 140 in the process.
When out for dinner, pay by credit card. Some Fools will put a meal with friends on their cashback credit card and have their friends give them cash for their share. This means that cashback is earned on the total value of all meals, not just your own. Of course, friendship is more important than a few pounds of cashback, so don't jeopardise any friendships by doing this.
If you have to pay for work-related expenses before claiming them back, then you may wish to consider using a cashback credit card.
As stated before, whether you use your credit card for your own or your employer's purchases, it would be a false economy to spend more money than you need solely to maximise your cashback.
8. Should I cancel my direct debits and pay by credit card instead ?
This is a matter of personal choice. Before cancelling any direct debits, here are a couple of additional considerations. Some organisations give a discount if you pay by direct debit, so check before cancelling them - it may outweigh any potential cashback. Paying by direct debit (or standing order) is easy because it just happens - it doesn't need your manual intervention. If you cancel a load of direct debits, you may find the task of remembering to pay everything by credit card on the phone too time-consuming. It is possible to set up regular payments using a credit card (a 'continuous authority') but you are not protected in the same way as you are with a direct debit. In fact, you cannot stop a continuous authority unless you can get the payee to stop collecting the money from your account !
9. Should I use my cashback credit card if the retailer charges me to use a credit card ?
Probably not, but it depends on what you want to achieve. It is almost certain that the charge for using the credit card will be greater than your cashback so it would cost you money rather than earn you money. However, if you need to make the purchase using a credit card anyway - to give you a couple of weeks cashflow - then using a cashback credit card would be better than using a non-cashback card. Remember - you still need to pay it off at the end of the month to avoid interest charges.
10. What credit limit will I need ?
As stated above, you will need a credit limit that can cope with the spending for your peak month e.g. normal monthly budget plus paying for a holiday plus an unexpected major bill.
11. When is my cashback paid ?
Normally you will be paid on, or shortly after, the anniversary of your card i.e. 12 months after being accepted for the card. Read the card's Ts & Cs to be certain.
12. Do I get paid cashback for Balance Transfers ?
No. I have never seen a card that does, but maybe someone will be the first ! Check your own card's Ts & Cs.
13. How is my cashback paid ?
Normally the cashback is credited to your account, although I know of one who sends a cheque to the cardholder.
14. Do I have to pay tax on my cashback ?
15. What happens if I close my card before the anniversary date ?
In most instances you will lose any accumulated cashback, so wait until after the anniversary before closing the card. The author has experienced one exception to this rule. As with any of these detailed questions, read the Ts & Cs of your card. If you were considering closing the card because you were worried about your credit rating, but you did not want to lose any cashback, then reduce your credit limit while leaving the card open until the anniversary.
16. Is there anything else that would stop me getting my cashback
Most card issuers insist that you operate your account very well e.g. they may not pay you any cashback at all if you make a few late payments or miss a payment. Once again, read the Ts & Cs very closely.
17. Will cashback be available for ever ?
Who knows ? As long as the credit card companies can attract new customers with cashback and find that it is affordable, then one would hope so. However, the last 12 months (mid 2003 to mid 2004) has seen a decline in the cashback percentages being offered. In early 2003 many cards offered 1% cashback and a few 'mean' ones offered 0.5%. By the end of 2003 only a couple were offering 1% and most offered 0.5%. In 2004 1% offers are pretty hard to find and many of the 0.5% deals have dropped down to 0.25%. However, don't be disheartened, there are still good deals to be found. It is still possible to get 0.8% and 1% cards and some even offer higher percentages for a short period or for high spending.
HOWTO Make Money from Stoozing
1. How much money could I make from Stoozing ?
Between 400 and 1500 per annum would be typical, but more is possible. It depends on how much money you can borrow from credit cards and what interest rate is being paid by your savings account. How much you can borrow depends on your credit rating, which in turn depends on many factors such as your earnings and what other debts you have.
For example if you borrow 30,000 from credit cards and save that in an account that pays 4.7% gross interest per annum, you will earn 1,410 before tax. For a normal rate taxpayer this would be approximately 1,100 after tax and for a higher rate taxpayer this would be nearly 850 after tax.
2. Can anyone make money from Stoozing ?
No, I am afraid not. To benefit from Stoozing, you have to be in the position where you do not actually need to borrow any money. So this means that anyone in debt can not make money by Stoozing. However, introductory rate credit cards can play a significant part in reducing debt by temporarily minimising (or eliminating) interest charges during introductory periods.
Even if you are not in debt, Stoozing may not be for you. There are many pot ential pitfalls for those who do not have an attention to detail. Before embarking on Stoozing you need to be honest with yourself. Do you have the time and inclination to manage your finances with great care ? Do you have an attention to detail ? Are you prepared to take the time out to read every line of your credit card's Terms and Conditions ? Do you have a track-record of managing your finances well ? Are you prepared to devote some time to researching credit card offers, making the applications and moving money around within specific time deadlines ? If the answer to any of those questions is "No", you may not have the right frame of mind for Stoozing.
Another area to consider, is how open to temptation you are. If you would feel in the slightest bit tempted to spend or gamble (including investing) the credit card money, then don't consider Stoozing. It is imperative that the borrowed money is sitting there safely in a no risk account so that you can pay off the credit card when required.
Finally, how much do you care about your credit rating ? To maximise your 'earnings' from Stoozing, you will probably take on a lot of 'debt'. While you know that you could pay off all the debt tomorrow because it is all sitting in a savings account, any future lender doesn't know that. So if you care about your credit rating or can foresee that you will need credit in the near future, then forget Stoozing for the timebeing. The more debt you take on, the more likely that another lender will turn down a credit request. If such a rejection was just for another Stoozing card, then that would be fine. However, if the rejection was for a mortgage application for your dream home then that could be a bit more of a problem.
3. Are there any risks in Stoozing ?
Yes, there are lots of risks, but anyone with the right frame of mind and attention to detail can minimise or eliminate the vast majority of them. See the section "Can anyone make money from Stoozing" to help you decide whether you have the right frame of mind. Here is a summary of the risks. (i) You spend some of the borrowed money and can not pay it back, (ii) You damage your credit rating and can not borrow money in the future when you really need it, (iii) you forget to pay off the full amount at the end of the introductory period, (iv) you don't know the exact date of the end of the introductory period (very easily done) so miss the date, (v) a balance transfer from another card doesn't not pay off the balance in time and you get charged interest, (vi) a credit card application does not get approved in time, (vii) you use your Stoozing card for purchases and get charged interest (You should not use your Stooze card for purchases. This is explained later), (viii) you damage your credit rating when you need to apply for a mortgage or other important loan.
4. How does Stoozing work ?
In simple terms, Stoozing is borrowing money from credit cards that offer a 0% introductory period and saving that money in a savings account for the duration of the offer. At the end of the introductory period the credit card bill is paid off in full and any interest earned in the savings account is kept by the Stoozer. Rather than pay off the credit card directly from the savings account, the Stoozer would normally have another 0% credit card lined up to pay off the first one. Thus, the borrowed money could stay in the savings account for a considerable amount of time.
5. Could you give me a step-by-step guide to Stoozing ?
There are many detailed considerations which are covered in the rest of this FAQ/HOWTO, but the basic process is outlined below.
i. Open up a good savings account that can be easily managed online and that pays a high interest rate.
ii. Apply for 1 or 2 credit cards that offer a 0% introductory period for a good length of time. At the time of writing (July 2004), there are 9 month and 12 month offers around if you look carefully, but a 6 month period is perfectly workable. The longer the period of the offer, the less work you have to do to keep the ball rolling.
iii. At least one of the credit cards should have a way of paying money directly into a bank account : either as a balance transfer or by a credit card cheque for which there are no charges (see "How do I choose a Stoozing credit card").
iv. Ask each credit card issuer for the precise date by which you have to pay the complete balance in order to avoid any interest payments. Ideally you should get this in writing. If you get the information verbally, make a note of the date and time you called Customer Services and the name of the person you spoke to, so that you can refer back to it if necessary.
v. Read all the Terms and Conditions of your new credit card(s) so that you understand exactly how the card operates.
vi. Ask your credit card issuer to do a balance transfer from your bank account to your credit card. The request can usually be made by phone, online or by completing a balance transfer form sent by your card issuer. The credit card issuer will put the requested funds into your bank account. [This is referred to as a balance transfer FROM your bank account because the assumption is that you are transferring a negative balance from the bank account].
vii. If the bank account that you specified in the previous step was your high interest savings account then the money is now where you want it - earning interest for you. If the account specified was your current account then you now need to move it into the savings account.
viii. If you have a second credit card that can also pay directly into bank account then follow the above steps for this card too.
ix. If you have a second credit card that only allows Balance Transfers from other credit cards (i.e. not from a bank account), then you need to route the money to your savings account via a card that does allow a bank transfer (e.g. your 'Card 1' mentioned above). The steps are (a) Ask card issuer 2 to Balance Transfer from card 1 to card 2 (this moves money from card 2 to card 1), (b) Ask card issuer 1 to Balance Transfer from your bank account to card 1 (this moves money from card 1 to your bank account).
x. At this point you have moved the money from your credit cards into your savings account and these free 'loans' are earning you interest, so much of your work is complete. However, during the course of the 0% introductory period you must still make the minimum monthly payments requested by your card issuer. These can be made from your bank account or from your savings account.
xi. About 2 months before the end of the introductory period of your card(s), you should start researching which cards you should apply for as replacements for your current card(s).
xii. About 5 or 6 weeks before the end of the introductory period you should apply for your new card(s).
xiii. As soon as you get your new card(s), ask the new card issuer to do a balance transfer from your existing credit card(s) so that you pay them off in full before the end of the introductory period. Keep a close eye on this. If there is any chance that the balance transfer will not go through before the end date of your introductory period, then cancel the balance transfer request and pay the existing cards off from the money in your savings account (known as your 'Stooz Pot'). Whatever happens, you do not want to pay any interest at all.
xiv. Once you have paid off your original cards, ask the card issuers to close the accounts and ask them to inform the credit reference agencies of the closure.
xv. At this point you have moved your 'debt' from your first set of credit cards to your second set of credit cards while keeping all the money in your savings account. Ensure you that you adhere to the Ts & Cs of these new cards and pay them off by the end of their introductory periods, exactly as you did with the first set.
xvi. 2 months before the new cards start charging interest, start researching cards for your next set . and so the process continues to repeat itself. And guess what ? Many card issuers will let you apply as a new customer if you have not had an account with them for at least 6 months, so if you closed down your old credit card accounts when they came to the end of their introductory period, then you can reapply for them in the future.
6. But is it legal?
Yes. You are simply taking advantage of introductory offers made by the credit card companies.
7. But is it moral ?
The question of morality is down to personal judgement. Some people feel that taking advantage of such an introductory offer without intending to be a long term customer is immoral. Others see this as perfectly legitimate. Yet others believe that making money from credit card companies has a certain poetic justice to it. Make your own judgement.
8. Will Stoozing effect my mortgage application ?
Yes. The more money you borrow, the more cautious your mortgage lender will be. They certainly will see how much money you have borrowed on credit cards and it will effect how much they would lend you. You would be advised to suspend your Stoozing at least 6 months before making a mortgage application i.e. to pay off all your Stooz cards and close them.
9. What do I need to look for in a Stoozing card ?
First and foremost, you need to find a card which offers an introductory 0% period on Balance Transfers. This allows you to move the money somewhere else so that you can earn interest on it. The longer the 0% introductory period the better, because it gives you more time until you have to start thinking about the next card and making another application and balance transfer.
You should always try to have at least one card that provides a route to make payments into a bank account.
Some cards also offer a introductory 0% on purchases. For the most part, this does not add very much to the Stoozer because as long as he/she can transfer out the whole balance, why would he/she want to make any purchases on the card. Besides, why not use a cashback card for any purchases and make money that way too ! The only time that a 0% on purchases is of use to a Stoozer is if they do not have a credit card that allows a transfer to a bank account. Using a 0% on Purchases credit card can allow you to build up the borrowed money over a period of time. Instead of paying off the card each month, the balance grows and after the end of the introductory period the balance can be transferred to a new card.
N.B. It is crucial that you know whether your card offers 0% on BTs, Purchases or both, because you need to treat them differently.
10. Where can I find the best Stoozing cards ?
Look for the balance transfer information at the following websites. Moneysupermarket http://www.moneysupermarket.com/Cards/credit_card.asp
The Motley Fool. Look for 0% on balance transfers in the "intro interest rate" column of the table. http://www.fool.co.uk/cards/tables/compare.htm
Moneyfacts. A rather incomplete list here http://www.moneyfacts.co.uk/cards/charts/cards_intro_rates.htm
ThisisMoney. Links directly to Moneysupermarkets Balance Transfer page http://www.moneysupermarket.com/CardsP/CardsResults.asp?strSortMethod=0&CardType=Credit+Card&Feature=StandardTrans&AnnualFee=Any&strSMethod=0&CardOption ≠ditCard&Next.x%&Next.y
11. How do I choose a good savings account for my Stooz money ?
Very simply, you need an instant access savings account with a high rate of interest and one that you can operate simply e.g. online or over the phone.
12. Where can I find the best savings accounts ?
Look at any of the financial websites or in your daily newspaper.
Complete list from moneysupermarket http://www.moneysupermarket.com/Savings/SavingsResults.asp
13. What do I need to consider if I use my Stooz money to offset my mortgage ?
14. Can I make the occasional purchase on my Stoozing cards ?
No. If your card is a 0% on Balance Transfers with a normal rate for Purchases, do not use it for purchases. When you make your minimum monthly payments the credit card company allocates that payment against your lowest rate debt i.e. they will reduce the 0% Balance Transfer amount, not your purchase amount. This means that you will be charged interest on your purchase every month. You have no way of avoiding interest for the rest of the introductory period unless you pay off the full balance and start again. Do not use such a Stoozing card for purchases !
Of course, if your card offers 0% for Balance Transfers and 0% for Purchases then you can make purchases. However, watch out for another little catch. Quite often credit card companies make the 0% period shorter for purchases than they do for Balance Transfers so they could still catch you out and get you to pay interest.
15. How do I get the money from the credit card into my bank account?
As stated above, you need a credit card that can pay directly into a bank account. There are not very many cards around that allow this, so the ones that do are the Stoozer's prize possessions. These cards make the payment in one of 2 ways. They either allow a Balance Transfer from a bank account or they allow you to write a cheque. Before making such a payment for the first time, you must check that you are not going to be charged interest or a fee for the balance transfer or cheque. Balance Transfers are usually free during the introductory period, but credit card cheques normally attract a charge (either interest or a truncation fee), so be doubly careful with credit card cheques. At the time of writing (July 2004), Egg and MBNA both allow balance transfers from bank accounts and MINT provides credit card cheques without charge. N.B. MBNA do charge for credit card cheques.
16. What if the balance transfer will put my other credit card or bank account into credit? Surely the credit card company won't transfer money if they know I'm not actually paying off debt?
Experience suggests that the credit card company neither knows nor cares whether your other card or bank account goes into credit. What they are primarily interested in is lending you money in the hope that they will earn money from you when the introductory period ends. Indeed, some card issuers encourage it by suggesting that you move some money into your bank account for other spending.
17. I see some fine print about charging a percentage on cash advances. Will this charge be made on balance transfers or transfers to current accounts?
For the definitive answer, check you own card's detailed terms and conditions. However, it is important to recognise that 'cash advances' and 'balance transfers' are 2 different things and are treated very differently. A cash advance would include withdrawing money by using an ATM or might also include using a credit card cheque. Balance Transfers are where you move money from your credit card into another credit card or bank account. Cash advances almost always attract immediate interest payments from the day you withdraw the cash, whereas balance transfers are almost always free during the introductory period.
18. Do I have to do my balance transfer at the same time as my application ?
No you don't have to. You can request it later at a time that suits you. If you specify a balance transfer on your application then it is conceivable that the card issuer will try to offer you a card limit that is more than your balance transfer request. However, there is no guarantee that they will. Also, sometimes the application process may take a long time which means it is difficult to be 100% confident that they will process your application and do a balance transfer in time.
19. My credit card company has sent me some cheques. What should I do with them? Will they charge me for using them?
For the definitive answer, check your own card's Ts & Cs. Most credit card companies charge you for using cheques, so rip them up or shred them. They either treat them as a cash advance or they charge you a transaction fee. However, there are sometimes exceptions. Currently (July 2004) MINT do not charge for cheques so they can be used very effectively for paying money straight into a bank account.
20. What happens at the end of the interest-free period?
See the step by step guide above. You can either pay off the full amount from you 'Stooz pot' (the bank account where you have saved your borrowed money) or you can balance transfer it to another card.
21. Can I get an extension to my 0% introductory period ?
There is no harm in asking and experience shows that some lenders do look favourably on such requests. If you pay off the full credit card amount before the end of the 0% period then the credit card company can see that you are in a position to close the card and move elsewhere. You may be able to get some attention from their customer retention team in such circumstances. The following are examples where Fools have got additional 0% time from existing lenders. Earlier in 2004 HBOS launched a new 9 months 0% card which they allowed existing customers (Halifax and Bank of Scotland) to upgrade to. MBNA seem to be the most happy to extend 0% offers, but they usually make a charge (up to 35) for a subsequent balance transfer. However 35 to pay for Balance Transferring 20,000 for a further 6 months could still make you 435 before tax ! Fools have also had some success with First Direct by saying that they are prepared to move between different First Direct credit card types. It may also be worth saying to your lender that you would happily move from a Visa to a Mastercard or vice versa.
22. When do I have to pay off the balance without getting charged interest ?
Many new Stoozers assume that they have to pay off a 6 month 0% introductory offer by the payment date of their sixth statement. Wrong !! - well in most cases that is wrong. With most card issuers the introductory period and its end do not coincide with monthly statement payment dates. The introductory period will normally end a set number of months after (a) your application date, (b) the date they set up your account, (c) the date they received your application, or (d) the date of your first balance transfer. If you miss this date, you will get charged interest. The best thing to do is to contact your credit card company and ask them what date you must pay off the full balance in order to avoid interest. Try to get this in writing by emailing them or writing a formal letter requesting the information. Failing that, ask for the name and phone number of the person in Customer Services who gave you the information over the phone. Record this date in your diary.
23. Can I have more than one credit card running at a time with 0% money earning interest for me? If so, how many ?
Yes you can. However, having too many cards may damage your credit rating. There are many Stoozers who have 3 or 4 cards. Some even have as many as 10 which they have built up over a period of time. If you want to sustain Stoozing over many years, then don't forget that you will need to leave some cards that you can apply for when you current cards run out.
24. Who are the Credit Reference Agencies and who uses them ?
Credit Reference agencies are independent businesses who collect, manage and provide access to information about each person's credit history. Most financial providers will consult one or more credit reference agency before agreeing to lend you money. The main 2 agencies are Experian and Equifax. By law they must provide you with all the information they hold about you within 7 days. The statutory charge for this is only 2, although they both offer enhanced services which cost you more. However, the basic 2 report is all you need to get an understanding of your current credit history. Their websites are http://www.experian.co.uk/ and http://www.equifax.co.uk/
Some financial companies consult one agency, other consult the other. A few use neither and some use both.
25. Do I have to pay anything during the interest free period ?
Yes you do. You must still make the minimum monthly payments on your card. Many new Stoozers overlook this. The simplest thing to do is to make the minimum monthly payment from your Stooz account. However, some Stoozers prefer to make the payment from their current account on the basis that if they can meet the minimum monthly payments from their day-to-day spending then they are saving even more money. N.B. It is unlikely that your savings account will allow you to set up a direct debit to make the minimum monthly payment so you will have to do the payment manually each month (i.e. set up an online payment each month).
26. If I have to make minimum monthly payments from my Stooz pot, how can I be making any money ?
You are making money. Don't confuse minimum monthly payments with interest payments. If you are not being charged interest on your credit card, then the monthly payments are paying off the actual capital amount that you owe. So when it comes to the end of the introductory period you have already paid off some of the card debt.
27. Doesn't making minimum monthly payments reduce the amount that I am earning interest on ?
Yes. If you pay your monthly payments from your savings account, then you are slowly reducing the amount you are earning interest on. Many Stoozers don't see this as a big deal. Others simply set up another balance transfer to put the money right back again to keep the Stooz pot topped up !
28. How does my credit rating affect my applications?
Quite a lot. The better your credit rating, the more money you can borrow and move into a savings account to earn you interest.
29. How can I maximise the chances of my card applications being successful?
Pace yourself. Don't get all excited and apply for 6 credit cards after reading this. You need to convince the lenders that you are in control and that you can meet your debt repayments. The more applications you make in a short period of time, the more you look like a desperate borrower. Each time you apply for credit (a new credit card, a personal loan, a free finance offer on some furniture, a new mobile contract etc), the lender will do a credit check. They will see who else you have been trying to borrow money from over the last 6 years. Experience shows that one credit check per month is perfectly acceptable as is 2 or 3 checks in one month followed by 6 months with none. Try to do no more than about 10 a year if you can.
When you no longer need a credit card, don't just leave it there with a zero balance. Close it. Although you may not consider the card as 'active', any lender will see that you have that amount of credit available to you to use tomorrow which increases their exposure. Also, if you have some cards that you still use a bit consider lowering their credit limits.
30. Can I make balance transfers between my card and my partner's card?
This seems to work OK for most people.
31. Why is it called Stoozing.
It is not generally known as Stoozing, but that has become the accepted term for it.
32. Who first called it Stoozing ?
33. I have a new 0% card with a high credit limit. Is there any reason why I should not transfer the whole amount into my savings ?
No reason not to. Go for it. However, some lenders won't let you transfer the full amount. They like to leave a bit of headroom to encourage you to make purchases on your card. If in doubt, give it a go or call them to ask first.
34. Does card loyalty help in Stoozing ?
Experience would suggest not.
35. Can I move the money directly from my Egg credit card to my Egg savings account ?
No. However, you could move it via another credit card or another bank account.
36. How do I increase my Stooz pot ?
The best way is to build it up over time, by adding new cards and/or getting higher credit limits. Many Stoozers find that they get better limits in their second batch of Stoozing cards because the new lenders want to allow them to balance transfer enough to close existing cards. However, that does not go on forever. As you build up higher levels of debts then more lenders get nervous and offer you lower amounts. It is a question of striking the right balance that works for you.
37. Is it OK to exaggerate my earnings on a credit card application ?
No. Putting untruthful information on a credit card application is fraud. It is not unknown for lenders to ask for proof of earnings so you could quite easily be found out!