What's the stooze catch?

LazyFan

I know this is going to be wrong as I am crap at Maths and a complete newb :embarasse, but if someone could criticise it in a positive manner, it would help me understand more of the pitfalls of stoozing.

For arguments sake lets suppose a stooze was attempted this way:

1) Many credit cards (around 20) are obtained and built up with high credit limits of 50k (Virgin go up to this I think).
2) However to get the credit that high all the 0% offers have of course expired.
3) Using one of the your mule cards you BT from them one at a time. Costing you roughly 20 x £50 (max charge on many cards) = £1,000.
4) Then from this mule card you SBT to your savings account. Unfortunately you are charged another £50 for this large massive one off transfer.
5) With your savings account of say 5% you let the money sit there for 20 days of each month.
6) The money from the savings account is then paid back to all the cards at once on the 21st day so, that no penalties of interest occur on the cards.

Thus over the year:

Expenses would account for:
£1,050 x 12 months = £12,600 in fees.

Gain:
Interest at 5% on £1,000,000 but only over 240 days.
Thus a year on a million would earn usually £50,000, however it is only in the bank 66% of the year so, it really comes back as £33,000.

Totalled at:
Minus your costs of say £13K, that means a profit of £20K before tax.

Now I know getting all those cards up to their max 50k limits is like fantasy, but lets say it could be done. There must be other flaws or everyone else who is much smarter and not as lazy as me would have done years ago.

As it seems they are not doing this.
Where am I going wrong?

lisyloo

A few points

1) As you say the credit limits are fantasy. I have a good credit rating and a high salary and get £5K on some cards.
2) If you are a tax payer you will have to pay tax on your savings interest unless you have a spouse who doen't pay tax. Even if you are a non-tax payer then once you get over your tax allowance you'll have to start paying tax anyway.
3) You probably wouldn't get 20 cards as at some point you'll get refused as you have too much credit. I suspect you could get £80K but not £1,000,000.
4) You probably won't get 5% interest on higher amounts (the % actually goes down on higher amounts).
5) The more cards you have the more disciplined you have to be so you will need to be very organised if you have lots. One slip and you can lose a lot of your profits.
6) If you need a mortgage or car loan you might find your credit record is hammered and you might not be able to get real credit that you actually need.

The basic idea is correct, but I think the scale of it is fantasy.
You can only put £3K in a cash ISA tax free.
You can only earn about £5K before you start paying tax.

moneysavingobsessive

Like you say, getting 20 cards to a 50k limit is a bit of a fantasy. Moreover, many credit cards actually come from the same issuer (e.g. Virgin and Alliance & Leicester cards are actually MBNA). A small number of issuers reduces the possibility of achieving this even more.

The risk is also greater - banks only try to achieve, but don't guarantee payments to reach other accounts over 3-4 days. So if something went wrong, you could owe £1mn at a high interest rate for several days, having a massive impact upon your profit.

Hope that helps...

LazyFan

Thanks very much for the help.
However what about expanding the fantasy a little bit more.

As more banks enter the market, then surely the problem of being picked up by several banks and applying for their cards will lessoned? And I suspect you can still get 5% on the million, even if you have to open more accounts.

As for complexity and bank screw-ups, I allowed 7 days and a little more for said transfers to go through. These days such things can all be automated by using the Internet of course. So, even that one could be handled by stupidios like myself.

Of course you hold true that for mortgages and other lending this will be a very big downside against the upside of the taxable 20k profit.

Is there some sort of list of what the maximum credit limit is on all the cards out there? I know it depends on where they rate you, but they must have limits, otherwise the rich would take advantage and get even richer!

Knowing the limits like the 50k Virgin publish could be useful. Maybe some mad cards go up to 100k? And this would lesson the risk of over applying exposure.

Bokken_2

LazyFan wrote:

I know this is going to be wrong as I am crap at Maths and a complete newb

2) However to get the credit that high all the 0% offers have of course expired.
:

I think you have missed the point of stoozing completely.You are not going to make a fortune from 0% deals on credit cards but you can make £1500 may be more if your on a good wage.
Stoozing into your mortgage is where the big savings ocurr.
As your lazy and crap with maths I suggest you read up on the subject thoroughly and do a small trial run or keep well alone.
The main point of stoozing with credit cards is that the funds you are borrowing are at 0% then stoozed into a higher interest account as above your 0% have expired and you would incurr interest on the money borrowed.

lisyloo

As more banks enter the market

The offers are being withdrawn not increased.

And I suspect you can still get 5% on the million, even if you have to open more accounts.

I think it's complete fantasy, but hey don't take my word for it.
If you think you can do it, what are you doing here?
Get out there and try it.
Expect the Inland Revenue to come round with the rubber gloves though :-)

Is there some sort of list of what the maximum credit limit is on all the cards out there?

Have you tried?
https://www.stoozing.com

Maybe some mad cards go up to 100k? And this would lesson the risk of over applying exposure.

I think you're dreaming.
If it was this easy we'd all be doing it.
But if you believe in the idea then go ahead, don't waste time here.

HGLTsuperstar

LazyFan wrote:

I know this is going to be wrong as I am crap at Maths and a complete newb :embarasse, but if someone could criticise it in a positive manner, it would help me understand more of the pitfalls of stoozing.

For arguments sake lets suppose a stooze was attempted this way:

1) Many credit cards (around 20) are obtained and built up with high credit limits of 50k (Virgin go up to this I think).
Figures qouted in the adverts are the max c/l, reality is very different, and as for 20 cards all running at the same time...
2) However to get the credit that high all the 0% offers have of course expired.
If you're stoozing, then the card is on a 0% offer, that's the whole point
3) Using one of the your mule cards you BT from them one at a time. Costing you roughly 20 x £50 (max charge on many cards) = £1,000.
Already covered the 20 cards scenario
4) Then from this mule card you SBT to your savings account. Unfortunately you are charged another £50 for this large massive one off transfer.
Who's your mule? Most common mule Egg transfer for free, and any C/C if for example you accidentally overpay whilst awaiting a BT so end up with positive balance, call them and negotiate
5) With your savings account of say 5% you let the money sit there for 20 days of each month.
6) The money from the savings account is then paid back to all the cards at once on the 21st day so, that no penalties of interest occur on the cards.
Minimum monthly repayments only
Thus over the year:

Expenses would account for:
£1,050 x 12 months = £12,600 in fees.

Gain:
Interest at 5% on £1,000,000 but only over 240 days.
Thus a year on a million would earn usually £50,000, however it is only in the bank 66% of the year so, it really comes back as £33,000.

Totalled at:
Minus your costs of say £13K, that means a profit of £20K before tax.

Need to revise your calculations using updated info, use the stooze calculator at https://www.stoozing.com

Now I know getting all those cards up to their max 50k limits is like fantasy, but lets say it could be done. There must be other flaws or everyone else who is much smarter and not as lazy as me would have done years ago.

As it seems they are not doing this.
Where am I going wrong?

Think that's been covered, you havent' grasped the concept of stoozing

LazyFan

Okay so stoozing is based on the 0% offers, however the overall goal as stated on stoozing.com is "make 'free' money from credit cards" , which is what I am fantasising about. The fact that 0% does exist is great but of course you will never get that on a new application with a 50k limit.

I have looked on that site and I cannot see where they state the maximum limit for the credit cards are as a list? Can someone please provide a direct link for detailing the known maximum the credit card companies will provide as a limit?


However I think the reason this has not been done before is that:

1) Credit rating gets shot to pieces and you get refused from the high credit card limit providers.
2) Even if you get past that, you will need a high earners salary to justify them increasing you from an already high level of credit.
3) I would suspect that cards like the Virgin card at 50k max are very rare and there are not enough to make it a possibility in the millions.
4) It requires lots of work, which may not justify the task effort.

In short, it really depends on if there are, enough companies with the limit and then the fantasy that you can actually get that credit. Which would explain why no one has ever managed it _pale_

HGLTsuperstar

I think you need to get rid of your fixation with a £50K CL on one card

bbruce

I doubt you could make a living out of stoozing, so start small and learn as you go along. Your stooze pot should increase exponentially for the first few years.
The best deals are to be had from "new" cedit cards, so build up your collection then ditch them when they stop offering deals. You can reapply after 6 months and become a new customer with all the associated offers withheld from existing customers.
I have over 20 cards, a 6 fig salary but only an average credit rating, probably because of my available cc limit also being in 6 figs. I find I have to "recycle" my cards regularly - have just closed Barclaycard a/c for the third time!
I've seen some footers on posts showing the size of stooze pots into 5 figures. I haven't kept records until this year but reckon mine is in that order. Not enough to live on, but pays for our holidays and increases their enjoyment.
Keep abreast of developments - this site and The Motley Fool are hard to beat. I may be ahead of you but I'm still learning!

Clariman

LazyFan wrote:

Okay so stoozing is based on the 0% offers, however the overall goal as stated on stoozing.com is "make 'free' money from credit cards" , which is what I am fantasising about.

Hi LazyFan ... I run stoozing.com and, you are correct, the site is primarily about making money credit cards. The two ways that it covers under the broad heading of "stoozing" are exploiting 0% credit card deals (stoozing) and earning money from cashback credit cards. The site covers other things, but is primarily about that and provides practical experience and discussions on that topic. Note the emphasis on the world practical.

I have looked on that site and I cannot see where they state the maximum limit for the credit cards are as a list? Can someone please provide a direct link for detailing the known maximum the credit card companies will provide as a limit?

The site does not have a list of maximum credit limits but we do have a poll which shows who typically give good limits. I guess we could find out details of maximum credit limits, but this information would be of very limited use because you credit limit is based on your own individual credit rating. When card issuers tout high maximum credit limits, that does not mean that they give them out to more than a handful of people. I am not aware of any company (off the top of my head) who offer 0% deals and limits of £50K (if only they did !). Most credit card issuers tend to have maximum limits of either £15,000 or maybe around £20,000.

Clariman