Stoozing: Create Free Money with Credit Cards

Featured No Annual Fee Card

The Bankwest Zero Platinum MasterCard is perfect for those who don’t want to pay a fee every year but still want the benefits of a platinum card. This card comes with complimentary international travel insurance, 24/7 concierge service and much much more.

• $0 annual fee
• 16.99% p.a. on purchases
• 3.99% p.a. for 9 months on balance transfers
• Cash Advance Rate of 16.99%
• Automatic purchase protection

Click here to read the Bankwest Zero Platinum MasterCard terms and conditions

The first thing that may come to your mind when reading ‘free money’ is that no money comes ‘free’. Well, while this method does literally involve no financial expense, it does involve a bit of time and effort.

• 1. What is stoozing?
• 2. Would it be a good idea to do this now?
• 3. How would you go about it?

1. What is stoozing? – Stoozing is taking advantage of an introductory interest rate on finance (typically credit cards), and then putting that money into a high interest savings account. Since the interest rate in the savings account is higher than the introductory interest rate, you can earn money from it.

2. Would it be a good idea to do this now? – Yes and no.
Yes, since many people are strapped for cash and can benefit from any form of ‘free money’. The only cost that ’stoozing’ involves is the time and effort.
No, because interest rates are dropping at the moment. Whereas introductory credit card offers also stay around 0-3%, high interest savings accounts tend to drop if the Reserve Bank makes cuts. You can still make money from stoozing, just not relatively as much as you could have when interest rates were higher.

3. How would you go about it? – The first step is to open a high interest savings account (you can compare the best ones at http://www.creditcardfinder.com.au/high-interest-savings-accounts). All of these accounts have no setup fees, maintenance or withdrawal fees. Try to go with an account that has the highest introductory rate possible. For the sake of this example, we’ll use the St George ‘directsaver’ account, with a rate of 5.75% (current rate as of June 15th 2009 is 4.50% – old rate will be kept for sake of calculations below).

Next, You need a credit card with a low introductory cash advance rate on it. Typically, credit cards don’t offer introductory rates on cash advances, only purchases.

Citibank’s ‘ReadyCredit’ offers 2.90% on purchases AND 2.90% p.a. for 6 months on balance transfers, but unfortunately has become unavailable for online application from Citibank.
By using ReadyCredit  as a case study, the next step is to withdraw the cash amount you wish to invest into your high interest savings account, let’s use $10,000.

• – Over 6 months, the $10,000 in your directsaver account will have
  increased to $10,287.50.
• – Over 6 months, the $10,000 you withdrew from ReadyCredit will have
  amassed to $10,145.
• – Therefore, after you’ve paid off the introductory ReadyCredit offer,
  you’ve earnt $142.50 for sitting back and watching your money grow!

As you can see, stoozing is fairly easy. Since interest rates aren’t too high at the moment, you’ll need to decide whether it’s worth the effort for your investment. You’ll also need the discipline not to go and spend your huge cash advance as well.

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0