Credit card stoozing, a.k.a. credit card arbitrage, is a simple process through which you can actually make money from credit cards and high interest bank accounts. Yep, you heard that right – with a bit of effort and some careful planning you can make money from your credit card. Here’s how!
What Exactly is Credit Card Stoozing?
Stoozing is a process through which virtually any individual can take advantage of the interest rate differences between their credit card and a high interest bank account, making money as a result. All that you need to start stoozing is a credit card with a 0% p.a. balance transfer offer or low introductory rates on cash advances. You can take out cash advances on these terms and place the money in a high interest bank account that has an interest rate that’s higher than the credit card.
How Does That Work?
If you take $8,000 for six months at 0% p.a. interest from your credit card and deposit it into a high interest bank account offering 6% p.a. return, you will earn $240 in interest in six months. At the end of the six months, you pay back the $8,000 that was borrowed from your credit card. After deducting your credit card’s annual fee, what’s left is your profit. This may sound too good to be true, because you’ve been taught that money doesn’t grow on trees. Well, in many cases it is. Banks understand the stoozing process and know that it happens, so they have safeguards in place to make it more difficult.
Who Can Stooze?
Anyone can do it, but it isn’t for everyone. It’s virtually risk free for a person who is very aware of their finances, pays attention to money issues, and has the ability to handle the complex timing involved. So if you aren’t confident handling money like this, then avoid it.
What Are the Risks?
While it is a simple process, there are some risks that you should keep in mind if you are considering the technique. Think about your card’s monthly payment schedule so that you know how much you will have to pay and when, because late payments are not an option if you want it to work. Also, you’ve got to factor in your credit card’s annual fee and work out its impact on your potential profit. Do plenty of research on your credit card and make sure whether or not interest will accrue on the amount that you have borrowed.
Check the Small Print!
There is some more important information that you need to know before setting off on your stoozing adventure. Make sure that you read and fully understand the terms and conditions of any credit card and high interest bank account that you plan to use.
Before you start applying for credit cards on a whim, let’s get one thing straight! Stoozing isn’t money for nothing – there’s a lot to manage and you have to work if you want to make it profitable. So unless you happen to be a mathematical or financial guru and are using multiple cards simultaneously, stoozing is not feasible as a source of income.
Contributed by FinanceChoices.co.uk, an independent comparison website with reviews of many of the top credit cards with a 0% balance transfer deal available on the market.
