Stoozing dying out?

Chris_Nowak

Just a quick, probably naive question but is stoozing on the verge of disappearing with the credit crunch biting?

Is it right that fewer and fewer cards are offering 0% introductory periods?

NickX

Its getting trickier, thats for sure. Main problem is Balance Transfer fees digging into the profit margins.

But I don't think its dying out just yet, there are still quite a few active stoozers around and the forum over on www.stoozing.com seems pretty busy especially with "newbies", so I think we've got a way to go yet.

sicker

I've just picked up two 'new' cards both with bt fee but with 12 months 0% a small gain is available so on I go.

epsilondraconis

I have two 0% on purchases CC on the go with about £6k slow-stoozed on them at the moment. I still have approximately another 8 months to run on both and have another £6k available credit (I'm sure the wife will spend that soon enough).

Suffice to say that will net me approx £300 over the 12 month period. I may possibly balance transfer them after just to boost the profit a little higher.

Milarky

Stoozing won't end as long as credit cards continue to offer '0%' for new customers. When that was started by the likes of Egg and MBNA I thought it would be a 'flash in the pan' and that - like a lot of shop 'loyalty' card schemes - they would quietly drop these offers and reutrn to business as usual.

(That was in 2000 or 2001...) Egg actually did drop out of 0% offers for a short while too. But they then started offering it again, this time 'permanently'. And then all the other card issuers - one by one - got into the 'transfer your balances for 0%' game .. and the rest is history.

That's the point, however. Ten years ago what were the total annual amounts of 'transferred' balances sloshing around? Was is about 5 percent of card use (i.e. purchases)? Was it 10 percent? It must have represented a relatively small proportion of all credit card business with their customers. (I'm guessing here, please weigh in with any actual stats)

Maybe some bright spark ('in accounts') spotted that it was possible to haul a large number of the 'revolving credit' customers from other cards' books - and so make money out of those people - just by offering six months at 0%? If you were a revolving credit user back then, then your own preferences - to repay the minimum amount monthly - would still apply after the initial six months, would they not? You were exactly the sort of person these offers were aimed at.

However there's something called 'Fallacy of Composition' (or should that be 'competition') which means that if one business uses a loss-leader [0%] to procure customers from another, and the competition then uses the same ideas to procure customers from somewhere else - on the basis that 'it works' - they quickly drain the pool of these profitable opportunities.

Anyway, some digression here. But the main thought is that if stoozing was going to 'die' it would have happened quite early on IMO - as the card issuers all changed tack. Something changed this ('9/11'?) and instead they actually rolled it out to all customers - without basic checking of those customers which could easily have exposed the 'stoozers' among them.

In fact, now I'm thinking about it, this subject would be a fitting one for any economics student to dig into and compile their own research on. (Didn't Martin Lewis go to LSE?)

sdooley

Even lots of stoozers make mistakes which can be costly.

Stoozing is getting more expensive but also savings accounts rates are higher.

What will kill stoozing is a hefty increase in the base rate.

YorkshireBoy

sdooley wrote: »

Even lots of stoozers make mistakes which can be costly.

I'm not sure "lots" do, but certainly some do. The loss is greater at the outset though, as at least once you're part way through a deal you may be able to at least break even.

Stoozing is getting more expensive but also savings accounts rates are higher.

What will kill stoozing is a hefty increase in the base rate.

But if the base rate rises, then so [STRIKE]do[/STRIKE] should savings rates. I agree that BT fees may also rise (significantly, and possibly prohibitively?) if BOE rates were to climb 2% or so...but that's not going to happen is it? :eek:

I posted over on the stoozing site recently that the greater use of regular savers may mean the BT fees are offset somewhat. For example, it's entirely possible to make 8.4% AER on a £24,000 stooz pot by using a Halifax International Regular Saver and a 6.5% drip feed account. That's 6.7% after basic rate tax, so a 3.7% return on a deal with a 3% BT fee...even more on a 14/15/16 month deal. Minimum payments may reduce this a little, but even 3% on £24,000 is £720 per year.

Since card providers need to lend money to make money, and (careful) stoozers have some of the best credit histories so can exploit the lenders' 'flight to quality' strategy, I don't see stoozing (or even 0% offers) ending in the foreseeable future.

NickX

As has been mentioned, I think the key to stoozing continuing is the continued availability of 0% deals.

I also think the Card Companies make so much profit from the non-stoozers through sky high interest rates (MBNA seem to be upping people to 34.9% APR recently), charges for late payments, charges for credit limit breaches etc, that they can afford the "loss leaders" that are the 0% deals.

So I suspect that 0% and stoozing will continue. I do sometimes get a tinge of guilt when I consider that the profits from stoozing are infact funded by the less fortunate customers, but not for long enough to stop looking for the next profitable card deal

nzseries1

sdooley wrote: »

What will kill stoozing is a hefty increase in the base rate.

I know it's been suggested by someone else, but wouldn't this increase the profitability of stoozing, rather than decrease it?

Richard019

nzseries1 wrote: »

I know it's been suggested by someone else, but wouldn't this increase the profitability of stoozing, rather than decrease it?

I'm not entirely sure but wouldn't it also mean that the card providers could make even more money lending to banking organisations?

Rather than lend £5B to 5 million of us at 0% (with a 3% fee) they could lend it to a big bank for a higher return. There's only so far they'll go before they reach the limit of the "loss" they're prepared to make on it in an effort to gain new customers.

Either our fees would increase (maintaining the profit in practice but psychologically reducing it) or the availability would drop off as they looked to reduce the amount owed to them this way.

Len_Beach

epsilondraconis wrote: »

I have two 0% on purchases CC on the go with about £6k slow-stoozed on them at the moment. I still have approximately another 8 months to run on both and have another £6k available credit (I'm sure the wife will spend that soon enough).

Suffice to say that will net me approx £300 over the 12 month period. I may possibly balance transfer them after just to boost the profit a little higher.

I appreciate money saving as much as the next guy but the question flying around my mind is: Could you be @rsed?! That's £25 profit per month, one cheap meal with the wife and it's a gonner.

Not picking on you epsil but the whole concept of stoozing evades me. 83p a day to limit your further borrowing capacity.

I'll probably get shot down here but hey ho.