Big purchase: use the cashback card or slow stooze?

jeffh2007

A £3000 purchase coming up at the end of the month...

Should I use my Capital One 4% cashback card? Or should I put it on a 12 month interest free credit card?

cheers!

zalek

Have checked in my calculator cashback vs. stoozing. Taken into account min. repayments. Savings at 6.4% gross. The saving would give you 52.25 and cashback 48.00.

mike_wall15

£3000 x 0.04 = £120 Cashback

This will earn more money than stoozing once you've taken into account the handling fee, high minimum payments, and tax on savings.

There's no question I'd go for the cashback!

Clariman

mike_wall15 wrote: »

£3000 x 0.04 = £120 Cashback

This will earn more money than stoozing once you've taken into account the handling fee, high minimum payments, and tax on savings.

There's no question I'd go for the cashback!

It's not quite so clear cut as that mike. Firstly, if paid for on a 0% on purchases card there will be no "handling fee" to pay and minimum payments don't make a huge difference. Tax on savings depends on the OP's tax status.

As you say, 4% cashback on £3000 = £120 tax free. However, £3000 in a top paying savings account at 6.4% would earn approx £192 before tax. It is true this will come in somewhat less due to minimum payments - approx £160 I think. Assuming a standard rate tax payer that would leave you with £128 profit. A non taxpayer would make more money and a higher rate tax payer less.

Summary

* If you pay no tax or put it in an ISA, then go for the 12 months 0% purchases
* If you are a standard rate tax payer, it is 6 and half a dozen. Cashback is less hassle
* If you are a higher rate tax payer, go with cashback

Clariman

YorkshireBoy

Clariman,

Using a cashback card at the right 'time of the month' will also get you 56 days interest free, meaning an extra £30 gross interest on £3K.

4% cashback AND a 2 month slow stooz all rolled into one?

It's late, so if I've got that totally wrong I apologise.

YB

Clariman

YorkshireBoy wrote: »

Clariman,

Using a cashback card at the right 'time of the month' will also get you 56 days interest free, meaning an extra £30 gross interest on £3K.

4% cashback AND a 2 month slow stooz all rolled into one?

It's late, so if I've got that totally wrong I apologise.

YB

Yeah, I see what you mean. I thought that I was a detail person until I met you online !

Clariman

mike_wall15

Clariman wrote: »

It's not quite so clear cut as that mike. Firstly, if paid for on a 0% on purchases card there will be no "handling fee" to pay and minimum payments don't make a huge difference. Tax on savings depends on the OP's tax status.

As you say, 4% cashback on £3000 = £120 tax free. However, £3000 in a top paying savings account at 6.4% would earn approx £192 before tax. It is true this will come in somewhat less due to minimum payments - approx £160 I think. Assuming a standard rate tax payer that would leave you with £128 profit. A non taxpayer would make more money and a higher rate tax payer less.

Summary

* If you pay no tax or put it in an ISA, then go for the 12 months 0% purchases
* If you are a standard rate tax payer, it is 6 and half a dozen. Cashback is less hassle
* If you are a higher rate tax payer, go with cashback

Clariman

Yes silly me, I had BTs in my head, not 0% purchases. Find a card with low minimum payments and indeed there is a money method there :T

Clariman

Hi mike. There genuinely is money to made doing this. Many of us exploit both cashback and stoozing, There is a place for both. I think you are right to be cynical about it and check things out. I think Martin's article was a little glib if I may say so because it did not point out the BT fees involved, nor does site's stoozing calculator take BTs into account (or minimum payments for that matter). There is a lot of detailed help out there if you want to look for it.

Clariman

YorkshireBoy

Clariman wrote: »

I thought that I was a detail person until I met you online !

It's often a strength, but sometimes a weakness! :rolleyes:

Clariman

YorkshireBoy wrote: »

It's often a strength, but sometimes a weakness! :rolleyes:

You are not wrong about that - speaking from personal experience.... of myself that is!

webbo100

Thats assuming it's going into a savings account. For me the slow stooze would work out better, higher rate tax payer but money going into an account offseting my mortgage at 6.5%.

Just goes to show without all the information no one can give you an accurate answer. You need to post what you intend to do with the slow stooze money, interest that will apply and how your situation affects that interest ( high rate tax payer).