How to build up a stoozing pot?

pretty_butterfly

OK. I am totally new to this stoozing thing. I've read the guide and I get the principle but am unfamiliar with the detail of how this works. My understanding is it works like this:

1. Open a credit card account with a 0% interest introductory rate.
2. Do everyday spending (mainly food, fuel) on the credit card.
3. Make the minimum monthly repayments on the credit card.
4. Put the money that I would otherwise have spent on everyday spending in a high interest account (I think a regular saver would be ideal for this?)
5. Before the end of the 0% period on the credit card, either pay off the balance in full or transfer the balance to another 0% credit card (Can you do this? How?)

If this is correct, it will take a long time to build up much of a stoozing pot as my everyday expenditure is not that high. Is there a sensible way of building up the pot more quickly?

TheShape

pretty_butterfly wrote: »

OK. I am totally new to this stoozing thing. I've read the guide and I get the principle but am unfamiliar with the detail of how this works. My understanding is it works like this:

1. Open a credit card account with a 0% interest introductory rate.
2. Do everyday spending (mainly food, fuel) on the credit card.
3. Make the minimum monthly repayments on the credit card.
4. Put the money that I would otherwise have spent on everyday spending in a high interest account (I think a regular saver would be ideal for this?)
Just make sure you can access the money if you need to pay off your card balance before the 0% expires (unless you can balance transfer).
5. Before the end of the 0% period on the credit card, either pay off the balance in full or transfer the balance to another 0% credit card (Can you do this? How?)
You'd have to apply, and be accepted for, a 0% balance transfer card. You'd then request the Balance Transfer card provider to transfer the debt from your old card to the balance transfer card. You'd again pay the minimum to the balance transfer card until you near the end of the 0% period at which point you'd pay the balance off or apply for a new 0% balance transfer card.

If this is correct, it will take a long time to build up much of a stoozing pot as my everyday expenditure is not that high. Is there a sensible way of building up the pot more quickly?

There are a number of ways to build a pot quicker.

An example: I have an MBNA credit card. In March they offered me a Money Transfer offer whereby I could transfer money directly to my current account with no fee and an ongoing APR of 4.9%. I transferred the money to my current account and then transferred the resulting MBNA card balance to a 0% Balance Transfer card. I paid a small amount of interest on the balance while it was on my MBNA card but that balance is now at 0% for approx the next 25 months.

Ben8282

I assume you are debt-free apart from your mortgage. If this is not the case then stoozing is not for you as the interest you are paying on your debts will exceed any potential profits from the stooze.
You must first decide what you are going to do with the stooze money. What account are you going to put it in and how much interest will you earn? You will also need to consider any potential tax liability in respect of the interest.
Then you will need to consider how much you want to stooze which will obviously be determined by the credit limit you are given. That is something which I can't predict. You will know yourself the sort of credit limits that you have been given on other cards in the past; don't expect the new lender to give you a credit limit disproportionately higher to what you already have. In all probability it will be less than your highest existing limit.
It concerns me to some extent that you say your day to day expenditure is not that high. This is a vague statement as it depends on your interpretation of 'high'. However, if your current monthly credit card spend is very low in a real sense, then it is unlikely that you have the sort of credit limit or turnover on your cards to justify anybody giving you a good limit on the new one.
If, when you apply, you get a limit too low to be of any practical use, I would suggest that you forget the idea of stoozing for the moment and instead concentrate on putting as much monthly turnover through the card as possible with a view to getting a more useful limit on your next application.
There are 3 ways to go. Balance transfer, Money transfer or Purchases.
Balance transfer would not really seem to be appropriate for you as I assume you have no existing credit card balance to transfer. You could of course create such a balance if you are planning a really large purchase on a card in the near future, but I am certainly not suggesting that you spend money for this purpose.
That leaves Money transfer and Purchases.
A 0% money transfer is the same as a balance transfer except that the money is paid directly into your current account. Not all credit cards offer this and some cards offer only to established existing customers. MBNA are usually recommended for Money transfer cards. There may also be a fee which will need to be factored in. For example, if you were offered 12 months money transfer for a 3% fee, you would need to be earning interest at more than 3% pa just to avoid a loss with zero profit.
The preferred route would be Purchases though. Which leaves the problem of your low monthly spending. The purchase route eliminates any possibility of a fee but it can take longer to build up the stoozing pot if you spend very little.
Another trick with 0% purchase cards which makes perfect sense but goes against the generally given advice, is to continue to use the card throughout the stooze to maintain turnover on the card. Say for example you are given a card with 0% purchase interest rate for 28 months. Your credit limit is 5k, you want to stooze 2.5k and your average monthly spend is 1k.
In months 1 and 2 spend 1k and make minimum repayment.
In month 3 spend 1k and repay £500.
In month 4 spend 1k and repay 1k.
No interest, you have your stooze pot and you have a nice turnover figure likely to get your limit increased and improve your credit rating. Minimum payments on a promotional rate card are ok but monthly repayments of 1k would look a hell of a lot better.
As to what to do after, yes you should balance transfer to a new card which you will have to apply for at the time. However, if this is to be your first stooze, I would recommend repaying and starting over on the first occasion if you experience any difficulty whatsoever in obtaining the new card. Lenders like to see the 0% balances repaid.

pretty_butterfly

Thanks, that's some good food for thought!