Stoozing - the risks

Clariman

As one of the early Stoozers and the author of the Motley Fool FAQ on Stoozing, I am glad to see that other people are making money from credit cards. However, I get concerned when people throw themselves into it without being aware of the risks. If you have a mega-attention to detail, Stoozing is fairly straightforward, but it really does need that attention to detail and you need to be aware of the risks. You also need to be aware of how it may affect your credit rating. I have started this thread to give a bit of cautionary balance. A couple of extracts from the FAQ which explain the risks are shown below. If you don't have the patience to read the lines that follow, then you don't have the patience and attention to detail to be a successfull Stoozer !

Clariman

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 potential 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 Stooz 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.

The full Stoozing FAQ is here at https://www.stoozing.com . Also see Martin's article on credit card revenge.

Walletwatch

One of the most significant things that comes out of your post is the possibility that one has to risk giving up long-term credit that one may require sometime in future for short-term stoozing gains.

Has someone been on the wrong end on this one? E.g. have you been refused a mortgage loan or some other high-value credit, possibly due to your stoozing? This is one thing I'd very much want to know, as I personally have been rejected for a store card and a credit card in the recent past, and the stoozer of the family, my wife is the one with the better credit rating... Wouldn't want to jeopardise our collective long-term borrowing abilities too much

Clariman

One of the most significant things that comes out of your post is the possibility that one has to risk giving up long-term credit that one may require sometime in future for short-term stoozing gains.

Has someone been on the wrong end on this one? E.g. have you been refused a mortgage loan or some other high-value credit, possibly due to your stoozing? This is one thing I'd very much want to know, as I personally have been rejected for a store card and a credit card in the recent past, and the stoozer of the family, my wife is the one with the better credit rating... Wouldn't want to jeopardise our collective long-term borrowing abilities too much  :(

Hi Walletwatch - I have not been personally effected by a mortgage refusal. In fact, the reason I have Stoozed £85K is because I am fortunate enough to no longer have a mortgage and I don't care if I trash my credit card rating. Well - that is not entirely true .... I do care about my credit rating in so far as it allows me to continue to roll onto the next round of Stoozing cards.

The point about credit-ratings is that over-Stoozing (hey that's a new phrase !) would affect one's credit rating at some point. Mortgage lenders do credit searches and look at how much outstanding debt one has, so they may give someone a lower mortgage than they would otherwise be able to get. That could be bad news.

OTOH I have heard that some mortgage lenders will let you show them your savings accounts and tell them that you are Stoozing and could pay off the cards tomorrow... and they will take that into account.

I am not wanting to disourage people from Stoozing. I made about £1900 last year from Stoozing and cashback. This year I would expect it to be over £2500, so it is worth the effort. However you do really need to have an attention to detail and to read the smallprint on your credit card Ts & Cs.

On MSE I get the impression that quite a few people are launching themselves into it without having given thought to what is involved. It really isn't difficult but you do need to have the right approach.

Good luck
Clariman

Martinslovechild

Over-Stoozing (hey that's a new phrase !)

Hey, for every over-stoozer, there's probably a thousand under-stoozers.

I am not wanting to disourage people from Stoozing. I made about £1900 last year from Stoozing and cashback. This year I would expect it to be over £2500, so it is worth the effort. However you do really need to have an attention to detail and to read the smallprint on your credit card Ts & Cs.

Clariman, I know that you don't have a mortgage. I'm currently stoozing around the £68K mark and i've deposited this cash into my flexi mortgage account, effectively reducing it by £300 per month - a saving of £3600 per year. Add to that my wife's 0% car loan and the rest of the stooz which is in a savings account and i'm effectively £4000 better off (or £6666 gross per annum) which makes stoozing very worthwhile indeed.

I completely understand your points regarding applying for too many cards or applying too quickly etc and have been extremely careful to ensure that my credit history doesn't end up in tatters. Also, I tend to 'share' the stoozing with my wife - we both apply in equal measure which further reduces the risks (she's quite happy for me to apply for cards on her behalf because i've explained exactly what the financial benefits are and these also help us reach our goal of paying off our mortgage too in the next 36 months). It's always quite amusing though when I say "Honey, by the way - there are a couple of credit card agreements coming through for you to sign" .

Clariman

Hey, for every over-stoozer, there's probably a thousand under-stoozers.

Clariman, I know that you don't have a mortgage.

Hmmmm.... howd'you know that? I guess you must be a regular on the Motley Fool under a different name.

 I'm currently stoozing around the £68K mark and i've deposited this cash into my flexi mortgage account, effectively reducing it by £300 per month - a saving of £3600 per year.  Add to that my wife's 0% car loan and the rest of the stooz which is in a savings account and i'm effectively £4000 better off (or £6666 gross per annum) which makes stoozing very worthwhile indeed.

That's fantastic. I discovered the joys of Stoozing after having paid off the mortgage, but Stooz (yes - he is the one it was named after) uses it to offset his mortgage like your goodself.

I tend to 'share' the stoozing with my wife - we both apply in equal measure which further reduces the risks

I have only Stoozed with my own name and cards, because I didn't want to trash my wife's credit rating - mind you - we are linked on the credit reference agencies databases anyway so I don't know whether it makes much difference.

When Capitalone were offering 18 months at 0% recently I think I could have persuaded her to let me go for that one in her name but I was already at £85K which is a much bigger stooz pot than I had planned. It's currently back down to about £65K with another card due to drop out in the next few weeks, so I shall be sending off some more applications in January - maybe one in my wife's name.

Clariman

Joe_Bloggs

@Clariman you mention in your reply to Walletwatch that you do not have a mortgage anymore. Welcome to the MSE forum!
J_B.

Lopo

Can anyone provide a little more info on which mortage lenders will consider your stoozing pot when applying for a mortgage and hence will give you the better rates !?

What would one need to do when aplying, just show statements, etc....??

Thanks!

johnllew

I have only Stoozed with my own name and cards, because I didn't want to trash my wife's credit rating.

Then you have missed out; getting cards in your wife's name could double the scope of this lark. We've both been into balance transfers for over 10 years and it doesn't seem to have trashed each other's credit rating.