Please explain stoozing

I was reading through the article about stoozing on this website but I'm a bit confused about how it works; as always I need practical examples to understand how it works and hope someone can help me.

What exactly does it mean when the article states that is 0% for 16 months?
does this mean that for 16months I can spend on their credit card and I don't have to pay any money back to them?
after the 16 months are going to expire, do I have to pay all the money that I've spent in the previous 16 months, all at once or in rates?

I don't see how is it possible to spend money on these 0% cc for 16months without having to pay for that length of period.

currently i use a cc to earn avios duo but have to pay back every month else I'll hit interests but because avios points are pointless are you need a huge amount of points to get somewhere,I was thinking of finding a better cc.

My monthy wage is around £1000 and atleast half of it is spent.
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Replies

  • HappyMJHappyMJ Forumite
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    You still need to make the minimum payment.

    At the end of the interest free period they will start to charge interest you only need to pay the minimum payment but to properly stooze you should pay it off in full to avoid interest.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Cpu2007Cpu2007 Forumite
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    How is the minumum payment calculated?
    can I set a minimum payment automatically so that it pays into the cc from my current account?
    so for example,a month before the free period, I can pay all the money I've spend and I won't be charged any interest,is that correct?
  • cats2012cats2012 Forumite
    1.2K Posts
    Cpu2007 wrote: »
    How is the minumum payment calculated?
    can I set a minimum payment automatically so that it pays into the cc from my current account?
    so for example,a month before the free period, I can pay all the money I've spend and I won't be charged any interest,is that correct?

    Yes that's correct.

    Practical example:

    You spend £350 a month on going out, shopping etc
    You put that £350 on a 0% for 12 months card every month for 12 months and just pay back the minimum payment (let's say £20 for ease)
    In the meantime, you save the rest in a savings account at (again, for ease) 1% a month

    At the end you have on the card...
    (12 x 350) - (12 x 20) = £3960
    You also have £3960 in a savings account + interest of about £40 (sorry for speed I've not done the calculation exactly!!)

    Therefore you pay your balance off and have gained £40 "free money"
    Officially Mrs B as of March 2013
    TTC since Apr 2015, baby B born March 2017
  • Cpu2007Cpu2007 Forumite
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    cats2012 wrote: »
    Yes that's correct.

    Practical example:

    You spend £350 a month on going out, shopping etc
    You put that £350 on a 0% for 12 months card every month for 12 months and just pay back the minimum payment (let's say £20 for ease)
    In the meantime, you save the rest in a savings account at (again, for ease) 1% a month

    At the end you have on the card...
    (12 x 350) - (12 x 20) = £3960
    You also have £3960 in a savings account + interest of about £40 (sorry for speed I've not done the calculation exactly!!)

    Therefore you pay your balance off and have gained £40 "free money"

    Perfect explanation. Thank you

    What do you think is better for earning more money,stoozing or cash back cards?
  • rb10rb10 Forumite
    6.3K Posts
    To be perfectly honest, if after having read the article you still have these questions, then I'd suggest that stoozing may not be for you.

    To stooz effectively, you need to have a good understanding of credit cards, their T&Cs, payment requirements, how banks calculate interest, etc. One small error on your part can completely wipe out your profits.

    Due to this, it may be better to get a cashback card and pay it off in full each month.
  • YorkshireBoyYorkshireBoy Forumite
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    Cpu2007 wrote: »
    My monthy wage is around £1000 and atleast half of it is spent.
    You spend £500 per month on your credit card?

    Punch your numbers into the calculators here and see which is best, cashback or slow-stooz...

    Slow stooz calculator

    Cashback calculator

    Based on a £500 per month spend over 12 months, the projected profit is...

    Slow stooz: £46.18 (2.2% AER savings account for a BR tax payer)
    Cashback: £60.00 (at a flat 1%)
  • zerogzerog Forumite
    2.5K Posts
    Of course the best thing is to get a combined stoozing+cashback card, like nationwide select or tesco (if you have uses for clubcard points)
  • YorkshireBoyYorkshireBoy Forumite
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    ...and with a salary of £14K (giving £1K net per month), don't expect a circa £6K credit limit, which is necessary for a 12 month slow-stooz spending £500 per month.
  • Cpu2007Cpu2007 Forumite
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    Thank you everyone.
    @rb10, I totally agree and I wont be applying for any card if I don't fully understand stoozing,reason why I'm here as I had some doubts behind what's really going on.

    However my questions have been answered.

    @zerog that's exactly what I was thinking, a cashback card that allows stoozing would be the best in this case. I have checked tesco which doesn't really give cashback but it does give tesco points.

    Is it there any good cashback card + stoozing that anyone is aware of?

    My understanding is that overall stoozing is a lot better than cashback cards for the simple reason that there's more flexibility.

    For example: I understand that santandander cashback is one of the best cashback cards atm, you can get upto 3% on petrol and travel etc and nice cashback on stores too; however the problem is that it doesn't apply to everything.

    Unlicke cashback, in stoozing there's not this problem, I can buy whatever I want with a 0% card and at the same time put the money in a saving account (my current lloyds gives me 1.5% > 1.25 net) which means that there's no limit on how much I can earn on interests,interest rate doesn't change(like in cashback where it can be 3% but also 1%).

    Taking in consideration these points, I can manage the money that I'm earning the way I want and also put them on a higher interest saving account if I find one meanwhile I am using a 0% cc;What do you guys think?
  • edited 2 February 2013 at 4:11PM
    YorkshireBoyYorkshireBoy Forumite
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    edited 2 February 2013 at 4:11PM
    Cpu2007 wrote: »
    (my current lloyds gives me 1.5% > 1.25 net) which means that there's no limit on how much I can earn on interests,interest rate doesn't change
    When LTSB launched Vantage the interest rate was 4% on £5-7K.

    They then cut it to 3% on £3-5K.

    Then they had a 12 month offer (last September) where they paid 4% on £5-6K.

    Then they cut it again to 3% on £3-5K.

    There's no guarantee they won't cut it to 2%, or even less, at some point in the future.

    Even if you can get the 2.2% AER before tax I referred to earlier, you'd make more money by using a 1% cashback card.

    And don't forget that you're assembling the slow-stooz savings balance over, for example, a year. This means your average balance is half the terminal balance...so you're only making, say, 2% AER on half the money. In other words, you're getting 1% on your total spend (less some because you'll have to make the minimum payments each month).

    So where's the benefit in slow-stoozing purchases?

    Re 'combined' cards, you're really limited to Tesco & M&S (for reasonable 0% durations). With M&S you're limited to spending the cashback (in the form of M&S vouchers) in store, whereas with Tesco you can wait for double up promotions in-store/online or even exchange the points for 3-4 times face value at selected 'partners' via their Tesco Deals scheme. And 4 times face value is (at least) 4% 'cashback'.
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