Stoozing first time queries

LL_USS

@kempiejon I see...... Now I know what is "slow stoozing" and (a little bit about) balance transfer. I have always been scared of borrowing, always paying off whatever I could, and have only now realizing it is not too scary to manage the good debts. 

It is perhaps not the best time for stoozing when saving interest rates are falling, but it's okay I just want to see how I can manage this. I don't have a credit card balance to transfer at the moment but I can see if I keep transferring some big balances (with the ability to pay these off in full when they are due) it will be higher profit, compared to the amount I am still just building up. I do have some big amounts to pay soon so it still helps a bit after 24 months. 

I am thinking of where best to park the money for this card balance. I think I want to keep my ISA intact and keep this in a GIA intead (trying to keep an eye on the tax-free allowance for saving interest too).

LL_USS

@kempiejon so your £200/m payment is to pay both interest and capital to pay off the whole balance by the end of the 0% period.

If I had a dozen of cards with different expiry dates I would do the same, sacrificing some profit for some simplicity. I only have one card at the moment and will only have a small amount building up, so I'll see how it goes.

PS: is it just me or is it not straightfoward to work out these calculations, or to understand details in financial agreements such as for a purchase card..... I don't think I am that daft and still I feel quite nervous always thinking there are things hidden that I miss/ do not understand. I am getting more confident with a few things, for e.g. mortgage, pension but ONLY after many years working them out and learning from others. But for newer things to me, like credit card use and payment, investing in S&S.... at an early stage I feel it's quite overwhelming to learn. Yet I am curious and still willing to learn, just very slow :-)

kempiejon

@LL_USS yes the £200 covers the balance (there's no interest) and is a sacrifice of some profit as protection against a mistake - one month of interest charged could wipe out a year of savings profit. In my earnly days I had a card interest free period end 1 week before I had diariesed it and still had £2k outstanding. Being 1 week late clearning the balance wiped 12 months of profit so sometimes I set the monthly repayment to (mostly) clear the card by end of term.
Now, where to park the money. Savings income tax is to be considered, with your GIA where do you actually put the money and are there any associated costs? I generally use savings accounts, premium bonds and short dated gilts.

Bare in mind that at the end of your purchase card interest free period rather than clearning the outstanding amount from your savings/GIA you can look around for a low-fee, long term balance transfer. But that's next steps.

LL_USS

@kempiejon ah yes, 200/m in this case is just paying back the balance as it's 0% interest (I am only used to mortgage terms - capital and interest and those stick on my mind :-).

Yes indeed at the end of the term I will look for a balance transfer - hopefully there are still not-too-hard-to-find deals of low fee and a long period of 0% interest. If it's too difficult to find or too little profit to make it worth my time then I'll consider paying off.

Where to park the money - I have never tried premium bonds or gilts, just normal saving accounts now, and ISAs. I'll need to work out a bit of the spread - as I am still learning so I won't mind doing a bit of leg work for this.

Again thanks so much for your help working this out.

LL_USS

I have just tried this tool to calculate profit: https://www.stoozing.com/ trying to use it as an illustration

I use the Stoozing Calculator option in the link above. Having just paid £2200 for my kid's uni accommodation instalment as soon as my newply applied 0% interest account is open (24m), I use this amount of £2200 for illustration. It is not a balance transfer but effectively it's a starting balance with no fee. If I use this whole amount £2200 on a saving account (5% interest) for this whole 24 months period, the total is £110/year or £220 interest after 24 months. But I need to use some of this account to make minimum payment (2.5% of balance each month) so at the end so not all the £2200 amount gets the whole interest and the net interest is £171 something after 24m. Sounds right. Good! Thanks @Organgrinder for introducing the tool.

[font=courier new][b]Stoozing Profit Prediction [/b]

[b]Data entered by the user[/b]
Balance to be transferred (pounds)...... 2200
BT card interest rate (%) .............. 0
Introductory period (months) ........... 24
Balance Transfer Fee (%) ............... 0
Maximum BT Fee (pounds)................. No Maximum
Min Monthly Payment Type ............... Percentage
Min Monthly Payment Amount (% or pds) .. 2.5
Savings interest rate (AER %) .......... 5
Tax rate ............................... Not taxed or offset

[b]Your Results[/b]
Balance Transfer Fee paid (pounds)...... 0
Stooz pot balance at end of intro ...... 1370.19
Credit card balance at end of intro .... 1198.21
Gross Profit before tax on interest .... 171.98
Tax on interest to be paid ............. 0[b]
Your Profit (pounds).................... 171.98[/b]

[i]Created using the Stoozing Calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission.[/i][/font]

LL_USS

Also, we need to pay attention to the percentage of card balance for minimum payment for the 0% interest purchase card.

I am having M&S card, the minimum payment is 2.5% of balance

Lloyds - also 2.5%, but Barclays only 1%.

If the balance to transfer is very high then the low percentage for minimum payment does make quite a difference. For e.g. using the same calculator, for a 30K balance with a card 0% for 12m, 1% minimum payment case yields 852£ interest (3% interest saving) and the 2.5% minimum payment case yields only £786. At the time when it's more difficult to make money work hard, every little help I suppose.

Guess I will apply for Barclays 0% interest card before the next round of holiday or travel booking :-). I already booked hols for this summer.

Jami74

I use NatWest and RBS balance transfer cards. No fee and no interest for 12 months. Minimum repayment is 1% but I pay a flat £100 a month (balances both just under £10k).

The repayments come out of my income to the credit card instead of going into savings. It works well for my budget to have set outgoings that are the same each month.

I keep the savings in easy access accounts so I can use them to pay off the cards at any given time. You mention GIA, if you mean investment accounts you need to be careful that the investments don't go down and leave you with not enough to pay off the credit cards when the time comes.

I don't slow stooze with purchase cards because I'd have to work out each month how much to put into savings to cover the spend. I like the simplicity of fixed, whole numbers.

LL_USS

@Jami74 thanks. I will look out for free balance transfer when this first purchase card comes near to the end. I had always cleared credit card balances monthly before and I am only trying to learn how to do this - I have no balance to transfer at the moment. I can see that balance transfers knowing exactly the numbers in each account is much more straight forward. Now I just set up direct debit for the minimum payment each month so no need to keep adjusting anyway.

Sorry I didn't realise GIA means general investment accounts. I meant general saving accounts, outside of ISAs. I have the whole card limit available in a cash saving account to be ready to pay off any time.

MrFrugalFever

I know this thread is a couple of months old now but thought i'd comment with my experience....

Your method of stoozing seems to be reasonable. You are correct in that you MUST make the minimum or face losing the 0% offer. Personally for me, I would make the minimum PLUS a few £ which can easily be done via a minimum DD and then set up a S/O from current account for a couple of £ to CC.

Your method of purchasing on 0% and then putting the equivalent aside in to savings minus the minimum payment will take quite some time (depending on your disposable income) to start generating any benefit to you.

How I started my journey is as below;
I didn't start with slow stoozing and 0% purchase card as I was in a situation whereby I had reasonable savings and some fairly large expenses which I put on my Reward Credit cards (instead of using my savings) and then simply balance transferred from them at 0% fee. I decided to utilise as many high interest regular savers as I could divvying up the pot of savings I had already and then manage the minimum payments from salary thinking of it as an additional savings transfer or regular bill. The regular savers vary from 5-7.5% depending on provider (do ensure they are easy access as some are not, like First Direct for example). Once i'd reached near the end of the 0% period I started looking at options for a 0% BT card with a 0% BT fee (if incur a fee this may wipe out any potential savings from your stoozing to date). I opted this route but you could simply pay the card off and repeat with slow stoozing on 0% purchases with a new CC provider.

If you were to BT the balance, you could then take your pots and amalgamate them in to an EA account with the best interest you can find. Do bear in mind £1000 psa for 20% tax payers and £500 psa for 40% tax payers.

I haven't been stoozing for 'years' but have for a while now and I can't say it has impacted my ability to obtain credit. My credit limits are fairly sizeable and on the odd occasion every few years i'll do a little housekeeping and close down any cards which don't bring anything to the table for me. 

I have a ceiling of what i'm prepared to stooze though as psychologically - although I know the money is sat there ready to pay off - very large sums of debt doesn't sit well with me just due to previous bad experiences many moons ago.

Good luck on the journey and hopefully you'll get in to the swing of things quickly and understand the rewards of money making money