6.11 Stoozing

Some credit card customers use their credit accounts to make money. They do this by getting a credit card with a long 0% on purchases offer and then use this card to make regular purchases like shopping or fuel. The cash they would have used to pay for the regular purchases would then be put into a savings account. At the end of the 0% purchases deal the cardholder would use the money in the savings account to pay off the balance.

However, as the money has been sitting in the savings account it has earned interest which the cardholder gets to keep because they haven’t paid any interest on the credit card. This is called stoozing.

Stoozing can be a dangerous game to play for those cardholders who aren’t disciplined enough to put the money to cover the purchases into their savings account on a regular basis. These cardholders would then be stuck with the debt at the end of the interest free period and would mean they end up paying interest charges at around triple that of what they would have earned on the money in the savings account. The cardholder would also need to be disciplined enough to pay out the large sum from the savings account once the 0% on purchases offer ends.

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