Stoozing: Make Free Cash from Credit Cards article discussion

hopscotch8

Thanks, that calculator is so much better! I only tried the MSE one before.

Wow if I use female powers of persuasion and get them to waive the fee that really would be worthwhile.

But one more thing, I am a basic rate tax payer should I select the 'not taxed' option or the 'basic (20%)' option if I am purely working out how much I would get back for putting £3600 of the cash into my existing ISA account which currently has zero money in it? I'm guessing I select the not taxed option if I've understood it correctly that your ISA money doesn't get taxed?

Hope that makes sense?!?!?

Cheers

JimmyTheWig

hopscotch8 wrote: »

Think I will definitely have to fund the minimum payments from the stooz pot but before I take the plunge does anyone think it would be worth it?

In an earlier post I wrote

JimmyTheWig wrote: »

even with those high repayments, you'll still have nearly 75% of the money earning you interest by the end of the year.
So there's plenty of time to make money.
Not tons of money. Won't make you disgustingly rich. But it will make you money unless you miss a repayment, etc.
The returns are best for those who can earn interest without paying tax on it (e.g. put the money into cash ISA, put it in savings of a non-tax paying spouse), but even net interest should easily cover the transfer fee.

So yes, I think it is worth it, as long as you be bothered to go through the application process, the transfer process, the monthly repayments and the final repayment - and make sure you do them all on time.

Though it does depend on your tax position. If you are going to have to pay 40% tax on the interest I'm not convinced it's worth it unless you can get a deal with a low or no balance transfer fee.

YorkshireBoy

hopscotch8 wrote: »

I'm guessing I select the not taxed option if I've understood it correctly that your ISA money doesn't get taxed?

Correct. But if you're using an ordinary (taxable) savings account for the rest of the money you can do two calculations for two separate BT's...even though you're only doing the one BT with the provider.

JimmyTheWig

hopscotch8 wrote: »

But one more thing, I am a basic rate tax payer should I select the 'not taxed' option or the 'basic (20%)' option if I am purely working out how much I would get back for putting £3600 of the cash into my existing ISA account which currently has zero money in it? I'm guessing I select the not taxed option if I've understood it correctly that your ISA money doesn't get taxed?

Ah, you've found a flaw in the calculator!

Because yes you are right. You won't get taxed on your cash ISA and so the "no tax" option should be selected.
But you've already said that your credit limit is 6K, so you will get taxed (at basic rate) on some of it.

You'll get a pretty accurate answer if you select the 10% tax option.

If you want a completely accurate answer then post what you are putting in to the other fields of the calculator and we should be able to work it out for you.

JimmyTheWig

Oh, and you'll have the further complication that you will probably be earning different rates of interest on your ISA to your savings account!

hopscotch8

Right, ok - assuming both cards only allow me 95% of the credit limit:-

£3600 will go into ISA account which has an interest rate of 6.25% AER
£7990 will go into high interest account - 6.5% rate

The virgin card is an existing card so I reckon I will be able to get them to waive the fee, twice now I have tried to close/cancel the card and they keep throwing offers at me. The current offer allows me 10 months at 0%.

The other card (HSBC) I only got recently and think I have about 11 months left on that one but would need to double check (not sure whether they would waive the fee though, this is 2.5%).

I did try to work it out myself but not sure if there is a glych in the calculator (stooz.com) because when I type in the fee as a % figure it gives me a different total than if I type in 2.5% of £7990 (£199.75 and then type that into the Balance transfer fee '£' box). Weird?

Thanks

YorkshireBoy

hopscotch8 wrote: »

I did try to work it out myself but not sure if there is a glych in the calculator (stooz.com) because when I type in the fee as a % figure it gives me a different total than if I type in 2.5% of £7990 (£199.75 and then type that into the Balance transfer fee '£' box). Weird?

Not really. The "Maximum BT Fee (£)" field only comes into play if you type something in the "Balance Transfer Fee (%)" field.

You don't need to do your own calculations. The stoozulator does it for you.

JimmyTheWig

She does need to do her own calculations (to some degree) as she has two different savings accounts.

Lets assume all the balance goes into your high interest account. Then we can use the calculator.

Virgin card. 95% of 6500 is 6175.
Now, I've read on another post that while subsequent repayments are only £25, the first repayment is 3% of the balance. Don't even bother putting this 3% into savings. So for the sake of the calculator you will be stoozing 6015 (I've added on 25 to 97% of 6175, as we will be telling the calculator that you will be paying £25 a month) for 10 months with no interest and no fee. Minimum repayment is £25. Interest rate 6.5%, taxed at 20%.
Profit is 254.47.

Other card. 95% of 6000 is 5700.
11 months interest free with a 2.5% fee.
Repayments 2.5%.
Again savings is 6.5% taxed at 20%.
Profit is 97.34.

So total profit is 351.81.

Note that this has handled all your minimum repayments, etc.
Now, you will get a better return on your ISA than your savings account.
And you will always have at least £3600 for the duration of these stoozes.
So if you put £3600 into your ISA instead of your savings for 11 months, you will lose out on £3600 x 11/12 x 6.5% less 20% (do you agree?) = £171.60.
And you will gain £3600 x 11/12 x 6.0% = £198.00.

So you will be better off by £26.40.
Bringing your total profit to 378.21.

YorkshireBoy

You're massively over-complicating things Jimmy, and in doing so you're introducing errors. For example...

1. If there's no BT fee on the Virgin card, there's no 3% first minimum payment since it'll be £25 (based on Fees + interest + ppi + £5, providing it'll always be at least £25). Therefore, you can put this 3% into the savings account.

2. Where's the "97%" you mention from?

3. You won't make 10 x £25 payments in a 10 month stooz. You'll make 8 or 9 (depending on the BT transaction date/statement date) and then a final payment to clear the account.

4. As I said in an earlier post, just do 2 x calculations...one for each savings account. Take any BT fee hit on the most profitable stooz pot, ie the ISA, and the second calculation is then fee-free. Sum them up and you have your return...easy. If you want to be more accurate, apportion the BT fee pro-rata...not so easy (unless it's a £7,200 SBT ).


Although the stoozing site's stoozulator assumes any BT fee is added to the balance (and not repaid with the first payment, as is the case with MBNA and Santander cards), this does not make much difference to the accuracy of the profit figure returned.

For example, the BT fee on a £10K stooz is around £300. this £300, if left in a savings account for a year, will return £15.60 at 5.2% net (6.5% AER gross). If that's the difference between deal and no-deal then maybe you shouldn't be stoozing that particular card.


Stoozing doesn't have to be as complicated as this!

hopscotch8

Ooops I didn’t mean to cause such a debate but any how if the amount works out to be as much as you/the stoozulator says it will then it’s well worth while me doing it so thank you both.

Over night I have thought of a few more questions I wanted to find out about: -

If the card is an existing card and you agree to take the card company up on a new offer does this get flagged up on your credit scoring or is it just when you apply for a new credit card that it affects your credit rating?

How many cards can people generally have on the go at one time to carry out stoozing in order to maximise profit?

Because I mentioned before that I already currently have debt on an existing 0% credit card, would it be a really bad idea to start the stoozing process now rather than after the other card is paid off? Providing I can get the money fee free from the card companies and pay the minimum payments each month from the stooz pot I won’t need to worry about finding the money for minimum payments from my income (ok so I understand now that doing it this way is not as good as I’m automatically eating into the final profit a little but I figure that at the end of it I’ll be able to use the profit made to pay off part of the debt on the other 0% card, I currently also pay £100 - £200 each month into my savings account so that I know at the end when the 0% deal runs out I can just pay the balance off therefore not incurring any interest). What do you think .... should I go for it or should I wait and pay off the existing card first?

Thanks again.