Credit card companies are giving away money.
You read that right: Free cash.
To attract new users, card issuers offer promotional, 0% interest rates and rewards.
Savvy consumers can play the system for money.
Stoozing is the art of using 0% introductory rates on credit cards as interest-free loans.
You put all purchases on the 0% interest credit card.
The money you are not spending on those purchases goes into a savings account with high interest.
After the intro period ends, you pay off the card and keep the earned interest.
That's just the tip of the iceberg.
Stoozing can be used for more profitable arbitrages, through cashback and free balance transfers.
Many people sorely need this money.
They live paycheck to paycheck with little savings to cover an emergency or time out of work, according to the Federal Reserve.
Half of Americans don't have so much as a $400 emergency fund.
Only 39% have a rainy day fund that could cover three months of expenses.
Stoozing could help families save and become financially secure. Yet nobody understands how the system works.
If you knew the playbook, you'd end up profiting at no risk and no upfront capital.
It's not as complicated as it sounds. If you're organized and have a solid credit score, you could start stoozing today.
Stoozing became a monthly routine for me back when I finished college and needed to tighten up my cash reserves to ensure I had enough in the bank to pay off my student loans.
Ironically, I ended up saving a lot of cash in the long run, by keeping a calendar and paying off my balances in full every month.
Who Should Try Stoozing?
Before you even consider stoozing, check your credit score.
You need a good score in order to qualify for a credit card with 0% interest.
In general, this means a score over 670, but it depends on your credit history.
Low score, no stoozing.
You should also have no debt since you'll just be taking on more.
Stoozing is only profitable if you can pay off the entire balance at the end of the promotional period. You need to be organized and financially disciplined.
That's because stoozing can be risky.
If you don't pay off your balance at the end of the 0% interest period, normal interest rates will kick in.
That could mean paying upwards of 13% interest on a five-figure balance. Ouch.
Don't try stoozing if you're going to apply for a loan soon because it can hurt your credit score.
While stoozing, you will only pay the minimum amount due on your credit card bill. This can affect your credit score, which is calculated based on the amount owed.
You may end up spending close to your credit limit, giving you a high utilization percentage. This will also ding your credit score.
There's also a lot of fine print. One late payment can void the offer and throw your whole plan out the window.
If you think you can handle it, it's time to start making free money.
Open a High-Interest Savings Account
Stoozing only makes sense if your money is in a high-interest savings account.
The average interest rate for saving accounts is a paltry 0.06%, so your money will not grow much at your local bank.
Online bank accounts reap much higher rates of return, usually over 1%, since they don't have the overhead costs of a brick-and-mortar location.
Look for a bank that is FDIC-insured and allows easy, free cash transfers. Always check for hidden fees.
Also, consider depositing savings into a local credit union. As a nonprofit, it can offer a higher interest rate than most banks.
Remember that you will likely have to wait a day or two to transfer money between accounts, so you'll have to plan ahead in order to pay off credit card balances.
An interest rate of 1.25% may not sound like much, but thanks to compound interest, it can have a big impact on your saving potential, writes Piggy of Bitches Get Riches.
In a typical 0.01% savings account, $6,000 will earn less than $0.05 a month.
When Piggy moved her money to online bank Ally, with 1.25% interest, the same sum made $5.19 in a month.
"That's over one hundred times as much interest as I'd earned in the same amount of time with my old savings account!
And sure, $5 ain't no thang… if you're a financially illiterate person who is bad at math.
"Thanks to the Law of Compounding Interest, that $5.19 is going to increase my monthly interest by leaps and bounds. It means my savings account is going to keep up with inflation even if I never deposit more money in it. The $0.05 in interest I'd earned before is but a pittance in comparison."
Ally compounds interest daily at a rate of 1.25%, making it a great choice for an online savings account.
It has no minimum balance or maintenance fees and is easy to manage online or through the mobile app.
Synchrony Bank, American Express Savings, and CIT Bank Premier are other options for high-interest online savings accounts.
Some banks offer a bonus for the initial deposit, so keep an eye out for special introductory deals.
Then you'll have even more money earning interest while you stooze.
Then open the bank account and start earning interest.
The more money you have in there, the more you will earn, so consider having paychecks automatically deposited there as well.
Find a Card with 0% Interest On Purchases
In order to make money with your credit card, you need one that charges 0% interest on purchases for as long as possible.
This is often called a 0% intro APR (annual percentage rate).
Look for a card with no interest for a year or more. (Note that this is not the same as 0% balance transfers, which are for moving debts, discussed below.)
During the introductory period, you don't need to pay off your balance in full each month since it will accrue no interest.
But you definitely need to pay the minimum due, otherwise, the card issuer may cancel the deal.
Even paying the minimum a day late could void the offer.
Carefully check the terms of the credit card and make note of when interest rates will kick in.
Whatever you do, don't miss this deadline.
By then, you'll have a huge credit card balance and would get slammed on interest.
To qualify for a credit card with a 0% introductory rate, you need good credit, meaning a score of at least 670.
You can apply for more than one, but remember that too many applications will hurt your credit score.
Plus, the fewer deadlines you have to remember, the lower your risk of missing one.
The Citi Simplicity card offers a long introductory period with no interest
CitiBank offers the longest 0% interest rate period—a whopping 21 months—on the Citi Simplicity and Citi Diamond Preferred cards.
You also pay 0% on balance transfers for those 21 months.
With no annual fee or late penalty fees, both are great choices for stoozing.
The Citi Diamond Preferred card is marketed as a VIP card, requiring a higher credit score than the Citi Simplicity card.
More consumers are likely to be approved for the Citi Simplicity card.
After the intro period, the regular interest rates for the Citi Simplicity card are 14.99-24.99%. Balance transfers cost 3%. Foreign transactions will also be charged 3%.
Credit card expert Beverly Harzog says that the Citi Simplicity card is true to its name: It's straightforward and easy to understand the fine print.
But she warns that it makes you think you don't have to worry about on-time payments.
"You may not have to worry about a late fee or a penalty rate, but this doesn't mean your tardiness won't be reported to the credit bureaus. If that happens, your credit score could drop."
In a nutshell, the Citi Simplicity and Citi Diamond Preferred cards give you almost two years of interest-free loans.
That's a long time to let your money grow in a high-interest savings account.
If you put $10,000 in your 1.25% interest savings account and didn't add anything for 21 months, you would earn nearly $250 through stoozing.
Boost Your Earnings with a 0% Interest Cash Back Card
This way you can earn interest and get cash back at the same time.
When shopping around for credit cards, also consider one with a 0% introductory APR plus spending rewards.
Based on data collected by the Bureau of Labor Statistics, the typical American consumer spends $13,828 in everyday expenditures like food and gas.
You could be earning cashback on almost all of it.
The Chase Freedom Visa offers the longest intro APR period plus cashback rewards, with potential earnings upwards of $500 in your first year.
If you maxed out rewards on the Discover It card, you could net even more.
Chase Freedom Visa gives you cashback while you stooze
The Chase Freedom Visa card has a 15-month, 0% interest period on purchases.
While that's shorter than the Citi Simplicity's intro period, Chase Freedom sweetens the deal with a sign-up bonus and cashback.
There's also no annual fee.
Depending on how much money you have in your savings account, this could be more than you earn in interest at the bank, negating the benefit of a longer, 0% interest period.
For instance, $10,000 saved at 1.25% will grow by only $125 in a year.
With Chase Freedom, when you spend $500 in the first three months, you earn $150.
You can also earn 5% cashback on certain purchases, like groceries and gas, up to $1,500 each quarter, for max annual earnings of $300.
Since you will be putting everything on the card you will likely meet both thresholds, earning $450 on those rewards in a year.
Then you get 1% cashback on everything else.
According to the BLS calculations, consumers would have another $7,828 in everyday expenditures.
At 1% cashback, that's $78.28, for a total of $528.28.
Add that to the estimated $125 interest and your net gain could be $653.28—for free.
Mark Lamb, the blogger behind Points to Neverland, explains that you have to be savvy to plumb the card for maximum cashback.
Each quarter, you need to activate the spending categories online in order to earn that 5% cashback. "This is a slight drawback," he says, "since you'll need to remember or set a reminder."
To up your earnings, Lamb recommends using Chase's shopping portal, which you can access through your Chase account online.
The Discover it card also pays out
The Discover it Card is another good cashback card with 0% intro APR for 14 months.
That's just shy of Chase Freedom's intro period, but the cashback bonuses are similar with Discover it.
You'll earn 5% cashback and up to $1,500 on rotating categories each quarter like gas stations or Amazon.com.
You have to activate the category online to receive this spending bonus. All other purchases earn 1%.
And the kicker is that after the first 12 months, Discover will match all cashback rewards earned during that period.
This could bring your total higher than what you earned with the Chase Freedom.
But since Discover is not as widely accepted as Visa, it may be harder to put all of your purchases on this card — especially if you travel outside the U.S. frequently.
If you max out Discover it's spending categories — $6,000 total — you would earn $300.
With 1% cashback on the remaining $7,828, that's another $78.28, for a total of $378.28.
With the cashback match, you'd walk away with $756.56. Added to the estimated $125 interest, that's $881.56 free!
Put all of your spending on your card and pay only the minimum due each month
With a high-interest savings account and a 0% APR credit card, it's time to start stoozing.
Instead of using your debit card or withdrawing cash from an ATM, put purchases on the 0% APR credit card.
Only pay the minimum amount due on your credit card statement each month.
The card issuer typically requires that you make this payment.
Otherwise, it may start charging you interest.
It's smart to set up automatic payments to make sure you don't miss this crucial deadline.
Do not touch the money in the savings account unless you need it to pay off the minimum balance.
Let it earn interest while you spend with the credit card.
It's like a cash advance without the fees. This is not license to overspend. You MUST stay under the card's credit limit.
If you exceed the credit limit, you could lose the 0% deal and damage your credit score.
Lee Balders, who writes the British personal finance blog Homely Economics, has made over £400 a year, or about $550, through stoozing.
Balders admits it sounds crazy to have thousands of pounds of unpaid credit card bills.
But she and her husband never considered themselves in debt because they could have paid the bills at any time.
They used the debt to make money.
They started stoozing to save for a down payment on a house.
They had a bank account with a good interest rate, but not enough money to fill it.
So they started building up debt.
"Are alarm bells ringing? Well, turn them off. It's simple: we open a credit card with a 0% interest introductory offer on purchases.
"The longer this offer period, the better.
"Then we use that credit card for every purchase we need to make. The cash we would have otherwise spent stays in the bank, earning interest."
However, Balders cautions that she was successful only because she is in control of her spending.
She says you should be prepared to pay it back earlier than planned in case you mistakenly go over your credit limit or unforeseen circumstances arise.
At the end of the intro rate period, Balders and her husband paid off their bills and applied for a mortgage.
Stoozing literally helped them buy a house.
Grow Your Savings
Save Even More Through A Free Balance Transfer
Stoozing doesn't have to stop after the 0% introductory period ends. Free balance transfers make it possible to shift your debt from one 0% APR card to another.
Basically, you take the balance on the 0% credit card, move it to another card for free, and continue paying 0% APR on the new card.
The money in your savings account will have more time to earn interest, so you'll rake in extra cash.
Once the intro period ends, you will pay regular interest rates on the balance. Note that date on the calendar: With a bigger and bigger balance, the amount you owe in interest could be astronomical.
Only take advantage of free balance transfers if you are financially disciplined. It's a potentially risky move.
Never put more on your credit card than you can afford. You should still be able to pay your balance at short notice.
The Citi Simplicity, Chase Freedom, and Discover It cards all offer free balance transfers.
If you started stoozing with the Citi Simplicity card and then transfer the balance to Chase Freedom, you would not pay interest for 36 months. That's a three-year interest-free loan!
Assume you put $10,000 in your savings account that pays 1.25% interest at the start of the first year. Then you contribute $5,000 in the second and third years.
- Year 1: start with $10,000, earn $125 in interest
- Year 2: start with $15,125, earn $189 in interest
- Year 3: start with $20,314, earn $254 in interest
- Total interest earned: $568
With the $528 you would earn through Chase Freedom rewards, that's $1,096 in free money over three years!
Pay Off Your Entire Balance
Pay that balance before the offer ends and you get to keep the remaining amount
You've noted the day the regular interest rate kicks in and kept your eye on the calendar.
Now it's time to quit stoozing and cash in.
Pay off your credit card balance in full. Do it a few days early to be safe.
Then walk away with hundreds of dollars in profit.
If you think you're ready to start stoozing, do a financial check-in first.
Consider whether you will qualify for a 0% interest card and are organized enough to meet deadlines.
Then think about which credit card is right for you.
Does Citi Simplicity's 21-month free borrowing period sound best?
Or the chance to earn Chase Freedom rewards?
Most importantly, get ready to start saving and earning interest.
Whatever your profit, that's an important step toward financial security.
The best thing I ever did for my financial future was to not only use my credit cards wisely, I made those cards work for me.
From paying off student loans with higher interest rates, to transferring balances from other cards, I saved money in every way possible, and paid off my balances sooner as a result.
Do you know any stoozing tactics we've missed?
Let everyone know in the comments below!