Stoozing: Create Free Money with Credit Cards
Posted December 10th, 2008
and last modified March 16th, 2010The 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 2.9% on purchases AND cash advances for the first 6 months, 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.
Related posts:
- What Is Credit Card Stoozing, And How Can I Make Money Stoozing?
- Budget Your Christmas Money and Enjoy a stress-free holiday!
- Money Magazines Best Credit Cards
- St George Fee-Free Banking With The Complete Freedom Fee-Free Bank Account
- How To Create A Budget
- Best Money Saving Bank Accounts in Australia
- DesignMyCard.com.au – Create Your Own Custom Designed ANZ Credit Card
Show Comment Form
Editor's Choice: Our Top Credit Cards
St George Vertigo
Low Interest
Low 2.99% for 6 months (reverts to 11.99%) p.a. interest rate and balance transfer rate, from one of Australia's most respected banks.
Coles Group Source MasterCard
Bankwest Zero Platinum MasterCard
No Annual Fee
Excellent introductory offer with a $0 annual fee for the life of the credit card and a 1.99% p.a. for 9 months on balance transfers