The cult of 'Stooz'
🔸 Plus: Serena Williams fell asleep during negotiations with Puma 🔸 Ex-Arsenal goalie Jens Lehmann bought the trademark to “The Invincibles” 🔸 How feasible is FIRE, really? 🔸
Your 2-minute guide to demystifying money and making you richer
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'Stoozing' — why does this exist?
The Bank of England’s base interest rate is stuck at 5.25% and that has revived people’s interest in “stoozing”.
What the heck is “stoozing”?
I’d never heard of it either until I stumbled upon it on Reddit’s r/UKPersonalFinance thread. A few more searches uncovered dozens of people offering their “stoozing” strategies, and dozens more asking whether you really can make money doing it.
Put simply, the promise of “stoozing” is that with skill and diligence you can run up a balance on a 0% interest credit card and put the equivalent amount of cash into a 5% high-rate savings account. When the free interest period on the credit card comes to an end, you take the cash in the savings account to pay off the balance on the credit card and — hey presto! — you profit via the interest gained in your savings account.
The credit card company ends up generating interest for you, instead of the other way around!
This guy claims to be leveraging £13,000 in a stooze account. This person says they’ve got £11,000 in play. An old thread from 2017 features someone doing it with a £90,000 balance.
Clearly, people are finding joy in a crafty way to pit the banks against each other that earns extra cash.
If you’re clever.
The name “stoozing” comes from the person who first made this famous, someone who posted the method on a Motley Fool forum under the screenname “Stooz” in the early 2000s. It was picked up by Martin Lewis of MoneySavingExpert and now “stooze” is officially a new verb in the dictionary. (It’s not clear where the “e” on the end came from.)
But does stoozing actually work?
Moneyin2 did the research and we can report that yes, this works in theory — but there are so many catches and pitfalls we don’t recommend it.
And we certainly don’t believe it is a way to build long-term wealth.
To make stoozing work, you need to do this:
Find a credit card offering a long period of 0% interest on any balance you run up.
Use that card to pay for all your regular expenses — groceries, Netflix, beer, etc.
Move an equivalent amount of cash into a high-rate, easy-access savings account, where you’re likely to get something like 5% interest.
Pay the monthly minimums on the 0% credit card.
Right before the interest-free period ends on the credit card, pay off the balance in full with the cash you have stashed in your savings account.
There are some obvious problems with this
They are:
It would make more sense to take cash off the credit card and place it directly into your savings, but money transfer fees usually come with a percentage charge, sometimes in the range of 4% — which will wipe out your gains. So you can’t do that.
If you fail to make the minimum payments on the credit card you’ll quickly rack up extra charges.
If you switch directly from one credit card to another you’ll be charged a balance transfer fee, which may be a percentage of the balance you’re transferring, and that may cost you more than the interest you earned in savings.
You need to be disciplined as the deadline approaches for the end of the 0% period on the credit card.
This only works during periods of high interest rates and when credit card companies are offering 0% introductory periods.
This only makes sense for people who don’t have any credit card debt.
This only makes sense for people who are organised enough to pay for regular expenses on a credit card and then put the same amount into savings. Forgetting, or being unable, to match your spending with your savings is fatal.
Any interest you earn in savings is subject to tax, unless you’ve stashed it in a Cash ISA, which adds another layer of complication.
Make just one mistake and you're screwed.
Bottom line: Stoozing is a bit like picking up loose change on a railway line. You might find some free cash. But if your concentration lapses, you might also get hit by a train.
Arguably, the amount of organisational effort required is not worth it for the small sums of money you’ll make. And if you’ve got large sums of money — like this person on Reddit who has “a stooze pot of around £30k”(!) then the question you ought to ask is, why is this not in a Stocks & Shares ISA where the gains are nearer 10% and not subject to taxes?
And for dessert …
Serena Williams fell asleep during negotiations with Puma over her $13 million sponsorship deal. To be fair, she was just 16 at the time.
Can you retire early? The FT looks at the “Fire” movement — people who want to reach financial independence and retire early, and asks how feasible it is.
Jens Lehmann, Arsenal’s goalkeeper in their 2003-2004, unbeaten season, has bought the trademark to the phrase “The Invincibles” for $30,000 — and Arsenal didn’t know anything about it. “Nobody had it, so I was looking into it. I was ready to get the branding rights for our group, so everybody who’s using it is violating our brand. The club were probably a little surprised because nobody thought about having the brand name registered,” he told The Guardian.
A second whistleblower at Boeing has died suddenly. Joshua Dean, 45, succumbed to a fast-moving infection on Tuesday. He had sued Boeing supplier Spirit AeroSystems, alleging the company had ignored safety warnings on its planes. John Barnett, 62, another Boeing whistleblower, committed suicide in March.
Flutter, the betting company that owns Paddy Power and Betfair, is moving its main stock listing from London to New York. It’s another blow to the UK exchange.
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Photos: Steve Jurvetson via Flickr;