one account?

bunking_off

Tassotti wrote:

Could you explain more about this "stoozing" you talk about. Can't quite get my head around it.

Hi Tass,

It works like this :

There are plenty of credit card suppliers out there that if you take a card with them, will give you 0% for balance transfers.

Now, on the One Account, there's a Visa card, which most people just file away, because it doesn't really work like a conventional credit card. If you spend on it, the following week (Wednesday I think), whatever the balance is on it is automatically swept from your One Account. So, if you buy something for £500, for a week your One Account Visa has a -£500 balance, then the following week £500 is taken out of your One Account to pay it off.

The thing is, this "sweeping" feature works equally well for both positive and negative balances on the One Account Visa. So, if the Visa is £10k in credit, the following week it'll be taken down to zero and a £10k credit will be applied against your One Account.

So, what you do is apply for a Credit Card with e.g. Capital One which offers 0% balance transfers. Whatever credit limit they give you, you ask for a balance transfer to pay off your Visa card, and give them the number of the One Account Visa. So, if they offer you a credit limit of £12k, you ask for a £12k balance transfer, and hey presto the following week your One Account balance will drop by that much.

If the 0% balance transfer rate is 6 months, at the end of the 6 months you simply pay the Capital One card off in full, and cancel the account thereafter. In the meantime, you'll have saved yourself interest on £12k - if like me you're on 5.6% rate that's £300+ saved on your mortgage.

Gotchas to watch out for:
- Credit cards increasingly have balance transfer fees. The best ones don't have a fee, but where they do, if it's e.g. 2%, make sure that it's capped at £50...in the above example you'd still save £250.

- Never, ever, buy anything with the credit card you've balance transferred onto. If you do, any repayments you make are applied to the balance transfer first so you end up paying interest on the purchases.

- Keep very good records. Always remember to pay the minimum monthly amount, and on time. Always keep a record of when the balance transfer rate expires so you can pay it off. Keep in mind this could be part way through a month.

- You can get multiple credit cards to do this (I've seen people on this site with a "stooze pot" of £60k+), but don't get carried away as it could hurt your credit rating.

- Look for cards which have low minimum repayments. E.g. Virgin (run by MBNA, not connected to One Account) only expect you to pay £5/month minimum, versus with a card that requires 3% you'd have repaid the best part of 20% of the "stooze fund" by the end of the interest free period.

There's a special board on this site about stoozing, and a website which gives some pointers. Many people use stoozing techniques without a One Account by putting the balance transfer into savings, but the returns are less and it's more complicated because they have to use special techniques (known as "mule cards") to get the transfer off a card and into their bank accounts...with the OA the associated Visa card makes it easier.

Tassotti

Thank you for this excellent explanation.

zeitnot

My husband and I have had a one account for the past two years. It particularly suits us as we are self employed and therefore pay tax in arrears, thus whilst we are saving for the next tax bill the interest we have to pay on the mortgage is greatly reduced.

Love the idea of stoozing though, thank-you for that!

Z