Stoozing - is it better than cashback cards

sva19

I am using cap one cashback card 1% for my purchases and Santander 3% for petrol.

I want to ask is stoozing i.e getting a tesco 0% credit card and then using a savings ISa say 3% better than the cashback card.

I guess all spending on cards is over £5000

mgarl10024

I guess it depends what proportion of that £5000 you are spending on petrol.

sva19

Let just say for this example £3500 spend and £1500 petrol

mgarl10024

Well, cash back wise:

3% on £1500 (petrol)
1% on £3500 (spending)

(0.03*1500) + (0.01*3500) = 45 + 35 = £80 cashback.

vs.

3% on £5000 (tax free, ISA) = £150/year.

So, the stoozing is better, by £70.


BUT, this assumes that you are saving the whole £5000 in the savings from day one. Which you're not.
So, assuming an average spending of £5000/12 each month, so at the start of the year you have £0 and at the end you have £5000, you'll end up with approximately half that - so £150/2 = £75.

So it's closer than you might think.

Though, if you had a longer 0% deal, or you balance transferred (so keeping the debt on a new card and the savings in the bank) then it'll likely swing away from cashback - as you only get paid the 1% on cashback once, but can keep the debt in savings longerterm.

Happy to have maths corrected here as I'm new to this too.

pqrdef

Yes, it all depends how long the purchases are stoozed for.

If you've got a card that offers 0% for 15 months, you don't have to keep spending on it for the whole 15 months. After say 6-9 months, it may work out that it's not cost-effective to do any more spending on that card, because the money won't be in the bank for very long before the card has to be paid off. So then you look for another 0% card to spend on, or switch to cashback.

sva19

Thanks for the calcs

Very interesting.

I will have to do my maths on what I spend and the cashback % and stoozing comparisons.


the 1% cashback card is a bit complicated, in that i thinks it 0.005% for first £2000 spend and then 0.01% thereafter...


As for balance transfers , i gather all card companies charge a % 2.5% for e.g, so this outweight any advantage!

mgarl10024

sva19 wrote: »

Thanks for the calcs
As for balance transfers , i gather all card companies charge a % 2.5% for e.g, so this outweight any advantage!

I'm not so sure (and am still learning!).

If you could transfer for 2.5% but it bought you 22mths, that's a deal of 0.025/22*12 = 1.4%. So, if you can find a savings account that (after tax, and there would be none on your ISA) pays above 1.4% you should be better off.

I think minimum payments dent this a little however.