Stoozing vs rewards cards

[Stephan]

Hello,

Been reading up on ‘stoozing’ on MSE and given the returns are higher than the amount you would get on an Amex card whether it makes more sense to switch spend to 0% card? For those not aware of the concept it involves spending on a 0% card and saving more at higher interest rate (currently >2%).

[Robm]

Interesting concept – I guess this has only become relevant with easy access savings going above 2%. It might affect your credit score if you have high credit utilisation? You’d also need to make sure you have the money to pay off the balance when the 0% offer runs out. There is a risk you could spend more than you can afford and not realise it until later. With Amex, if you are paying it off each month, you’d find out quickly if your spending habits were unsustainable.

[Robm]

One other thought – if you are gaming sign up bonuses – e.g. spend £3k, get 25k avios, with Barclaycard, your returns will be much, much greater than 2%. It wouldn’t really work for me as I don’t have a huge amount of excess spending above what I use to hit SUBs.

[Andrew J]

It certainly does affect your credit score the higher proportion of your total credit utilisation and proportion of a single account’s credit.

[Andrew.]

So you’re gradually increasing the balance in a 0% card, only making the minimum repayments.

That means the data is presenting, as if you are having difficulty in managing repayments,to the Credit Agencies.

Probably fine if you are unencumbered with a home loan. But if you are looking for a loan or remortgage, or even if you are looking to guarantee a child’s rental at University, be mindful that many agencies expect open-banking access to do a data slurp – and that’ll red flag.

[John]

You spend on Amex or whatever points-earning card then use a 0% BT to stooze it.

Yes it is wise not to let your credit utilisation percentage go too high if you want to keep opening new credit cards, so you should probably limit stoozing to less than 50% of your total credit limits.

Also back in 2017 or so I found that some BT cards started lowering my limit every month by exactly the minimum payment amount I was paying

[sloth]

Stooping was much easier in the past when you could BT numerous times from mule credit cards such as Egg or MBNA straight to your current account and then transfer those balances to 0% cards, and repeat. This allowed you to build up larger balances pretty quickly. And obviously interest rates were higher then to make it more worthwhile. I was running a total balance 3x my salary at the time, but credit was much easier to come buy then. Not sure how easy it will be to build up balances this time and not sure how wise it is as things are generally stricter now

[memesweeper]

I’ve done this, to good effect. Sainsbury’s bank does have a tiny kickback on the spend on 0% spending cards, so there’s a little double-dip there.

Obviously, all abandoned a good clear year ahead of my recent mortgage application.

[andiron]

This could be great if you know a way how to transfer large amount from CC to your bank account easily, let’s say like in old days top up Revo with £10k, then put it to saving account offering almost 5% and you have £500 free. Also be aware of taxes as £500 is interest limit without tax for those on 40% rate.
Right now I don’t have big spendings (I leave them for sign up bonuses) and accumulating monthly £500 is too much hassle.

[memesweeper]

If you run your own business, or have significant other spend with HMRC, it’s pretty straightforward to pay X thousand to HMRC with curve backed by a 0% card, and pocket the money from your firm/other source.

[Luca M]

Good points on higher taxpayers benefits, but also a lot depend on the return you get on rewards card.

MSE users do not consider using rewards on premium cabin flight as a good return as they would never spend that much money to travel in premium cabin in the first place so the “higher value” claimed through that channel does not stack up for the majority of them.

The same if you try to explain to them the value of the Platinum card by Amex (there it would get confused fits with the cashback card of similar name), when you can argue all you want about £300 credits on high end restaurant spend, £100 at HN and lounge access..

It is a good financial site but I do not think it calls for direct comparison for Frequent Flyers, high earners with a lot of disposable income, or simply HfP readers that enjoy travelling in comfort and love a a way of doing so cheaply.

[The Urbanite]

Luca M wrote:

Good points on higher taxpayers benefits, but also a lot depend on the return you get on rewards card.

MSE users do not consider using rewards on premium cabin flight as a good return as they would never spend that much money to travel in premium cabin in the first place so the “higher value” claimed through that channel does not stack up for the majority of them.

The same if you try to explain to them the value of the Platinum card by Amex (there it would get confused fits with the cashback card of similar name), when you can argue all you want about £300 credits on high end restaurant spend, £100 at HN and lounge access..

It is a good financial site but I do not think it calls for direct comparison for Frequent Flyers, high earners with a lot of disposable income, or simply HfP readers that enjoy travelling in comfort and love a a way of doing so cheaply.

It is definitely for a different market. Somebody made a thread about Sainsbury’s Saveback and people seemed more preoccupied with the interest rates Sainsbury’s Bank was offering than the potential to earn literally millions of points through the scheme.

[Rui N.]

I’ve been doing this whenever the opportunity arises, but not exactly as one vs. the other.
I’ve signed up for a couple of 0% cards over the years whenever there are SUBs (I remember £40 for Barclays, £50 for Santander and the Sainsbury Bank/nectar cards). I then use it for balance transfer from the rewards cards (cards that allow such transfers with 0% fees for a few months are more useful, otherwise I don’t spend enough to “fill” the card up if you can only do it for the first 45 or 60 days), except for Sainsbury’s where you can use Curve Fronted to get some Nectar points in the process of the “balance transfer”.
I then pay £100 per month for the 12/18/24 months the promo lasts until the last month (where I, of course, pay the full remaining balance).
I earn the SUBs, the Nectar points, plus the 2 or 3 pennies in interest for not having to pay the card for a while.

[Peter K]

There is also the point that you are locking that money away for 12-24 months. You need to ask yourself if there is nothing more useful you could use a free floating amount of money for in the mean time…

[memesweeper]

Peter K wrote:

There is also the point that you are locking that money away for 12-24 months. You need to ask yourself if there is nothing more useful you could use a free floating amount of money for in the mean time…

You can pay back anytime, not really locked in.

If inflation sticks at 10% someone giving you cash at 0% for 18 months really is doing you a favour.

[Rui N.]

Peter K wrote:

There is also the point that you are locking that money away for 12-24 months. You need to ask yourself if there is nothing more useful you could use a free floating amount of money for in the mean time…

What? It’s exactly the other way around. By putting the balance on this cards you keep cash free to do whatever you want with it. This is a loan, not a savings account.

[Luca M]

Rui N. wrote:

Peter K wrote:

There is also the point that you are locking that money away for 12-24 months. You need to ask yourself if there is nothing more useful you could use a free floating amount of money for in the mean time…

What? It’s exactly the other way around. By putting the balance on this cards you keep cash free to do whatever you want with it. This is a loan, not a savings account.

We are discussing stoozing though, not just the 0% purchase card in itself, so it would be linked to putting the equivalent amount spent on a highish (if 2-4% can be define as high) saving account, that to fully get the promised % earning, would need to be there for 12 months at least

[SteveJ]

I wouldnt take MSE’s description too literally, their guides are targeted at a different market. As Rui says, do what you want with the unpaid balance, just make sure you’re confident of having a way to pay it back at the end of the 0% term.

[Rui N.]

Besides what Steve said, if you didn’t have money in a 0% card, you wouldn’t have that money available for anything else, so there’s no opportunity cost.
If you BT £1000 from your Amex into your Sainsburys card, you get £1000 to spend for 18 months. If you hadn’t BT you would have had to pay your Amex bill in a few weeks and would not have access to those £1000 any longer.

[Peter K]

Rui N. wrote:

Besides what Steve said, if you didn’t have money in a 0% card, you wouldn’t have that money available for anything else, so there’s no opportunity cost.
If you BT £1000 from your Amex into your Sainsburys card, you get £1000 to spend for 18 months. If you hadn’t BT you would have had to pay your Amex bill in a few weeks and would not have access to those £1000 any longer.

You misunderstand my comment. I was specifically thinking about the OP’s, plus several more people’s, comments of putting it in a saving account. I’d take the money but I’d use it more imaginatively than saving it at 2%!

[andiron]

If you spend £1000 a month for a year with reward card giving back 1% that’s £120 back in a year.
If you stoozed that amount monthly with an account 5% (like Barclays Blue) that would be £300. So saving account above 2% is better here.
Obvs other things to consider are sign up bonuses, credit rating and possibility of fine for paying it too late, savings tax.

[richscape]

Peter K wrote:

Rui N. wrote:

Besides what Steve said, if you didn’t have money in a 0% card, you wouldn’t have that money available for anything else, so there’s no opportunity cost.
If you BT £1000 from your Amex into your Sainsburys card, you get £1000 to spend for 18 months. If you hadn’t BT you would have had to pay your Amex bill in a few weeks and would not have access to those £1000 any longer.

You misunderstand my comment. I was specifically thinking about the OP’s, plus several more people’s, comments of putting it in a saving account. I’d take the money but I’d use it more imaginatively than saving it at 2%!

What zero risk ways are there to beat savings accounts at 3% to 5%? If you’re taking a risk with that loaned money (say stocks and shares), and you can’t pay it back at the end of the term, you’re going to be in trouble.

[Nigel Keya]

richscape wrote:

Peter K wrote:

Rui N. wrote:

Besides what Steve said, if you didn’t have money in a 0% card, you wouldn’t have that money available for anything else, so there’s no opportunity cost.
If you BT £1000 from your Amex into your Sainsburys card, you get £1000 to spend for 18 months. If you hadn’t BT you would have had to pay your Amex bill in a few weeks and would not have access to those £1000 any longer.

You misunderstand my comment. I was specifically thinking about the OP’s, plus several more people’s, comments of putting it in a saving account. I’d take the money but I’d use it more imaginatively than saving it at 2%!

What zero risk ways are there to beat savings accounts at 3% to 5%? If you’re taking a risk with that loaned money (say stocks and shares), and you can’t pay it back at the end of the term, you’re going to be in trouble.

These easiest way to beat savings a/cs with zero risk is to swap out your second/ tertiary bank a/c from bank to bank for their very silly and generous incentives.

I just swapped to Nationwide yesterday for their free £200 joining incentive.

Already got about £800 free this year by swapping bank to bank (for joining incentives). See MSE switch banks.

[richscape]

Bank account switching is great, but it’s a completely separate conversation to how to get a risk-free return on £10k+ of stoozed money.

[Nigel Keya]

richscape wrote:

Bank account switching is great, but it’s a completely separate conversation to how to get a risk-free return on £10k+ of stoozed money.

You won’t get much better than 3-4% risk-free, you don’t have good options vs inflation