Is stoozing worth it in this scenario…?

Moneysaving23

Hi everyone,

I wonder if people can advise me if stoozing is worth it in the following scenario…

I’ve recently opened a new 0% purchase credit card with M & S that I’m yet to use.

I have an instant access savings account paying 5.2%.

At present I do most of my day to day spending on my Chase debit card (and therefore get 1% cashback on everything). I only move money into my Chase account when I know I’m going to use it and any money moved into Chase comes from the 5.2% instant access account. As soon as my cashback is available in Chase I withdraw it and pay it into my 5.2% instant access account.

My question is would I be better off putting all my spending on the 0% purchase credit card and leaving the money in the 5.2% savings account until I reach the credit limit on the M & S credit card.

Thanks in advance!

eskbanker

Not sure it's viable to say without more detail - you'd need to model the two methods based on your monthly spending volumes and how they relate to the credit limit, plus duration of your 0% deal and the minimum monthly repayment.

surreysaver

Normally you'd be better off using the 0% card and keeping the money in a 5% savings account.
Over a year, on a spend of £100, by keeping it in a 5% savings account you'd earn £5, but only £1 in cashback if spent on the cashback card.
Obviously this is an oversimplification, as the £100 would diminish over time due to minimum payments, and money spent nearer the end of the 0% expiry date wouldn't earn 5% for a full year 

daivid

surreysaver said:

Normally you'd be better off using the 0% card and keeping the money in a 5% savings account.
Over a year, on a spend of £100, by keeping it in a 5% savings account you'd earn £5, but only £1 in cashback if spent on the cashback card.
Obviously this is an oversimplification, as the £100 would diminish over time due to minimum payments, and money spent nearer the end of the 0% expiry date wouldn't earn 5% for a full year 

Though on the cashback card you could earn £12 by spending £100 every month. I don’t think there is an easy answer to this. My approach is 0.5% cashback on a CC for most spending, slow stooze on some big spending (£500 a time) and a stooze pot built up via MT. I haven’t the time or inclination to try to work out the optimal strategy. I do have a Chase card but keep it for foreign use and the rare occasions CCs are not accepted. For big earners and spenders I think an advantage of cashback is that it is interest free whereas with increased saving rates lots of stoozers are having to consider tax on their returns.

grumbler

Moneysaving23 said:

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My question is would I be better off putting all my spending on the 0% purchase credit card and leaving the money in the 5.2% savings account until I reach the credit limit on the M & S credit card.

If your monthly spending is more or less uniform, it takes you N months to  reach the limit and during this time you keep all the money you 'saved' on purchases in 5.2% savings account, you earn about 5.2%/12*N/2 =5.2%*N/6 (gross) interest on your credit limit amount. If you spend  the same amount with your Chase card you'll get 1% cashback. 
Even if N=2 (months)  the former is bigger. As simple as that.
If after N months you have K months remaining of 0% on purchases, you'll make extra 5.2%*K/12 in interest.
This rough calculations ignores minimum monthly repayments, but they will make very little difference because even after N months you can keep spending and maintaining high CC balance.

JuliusCaesar

If your interest-free period is for more than 12 months set up a monthly saver with Nationwide (8%) or First Direct (7%) and pay your average monthly spending figure (less minimum interest repayments) into this account to maximise interest.

born_again

JuliusCaesar said:

If your interest-free period is for more than 12 months set up a monthly saver with Nationwide (8%) or First Direct (7%) and pay your average monthly spending figure (less minimum interest repayments) into this account to maximise interest.

Not forgetting you still have to make minimum payments to CC.