High-interest savings accounts have returned, creating an opportunity for consumers to earn money by strategically using 0% credit cards, a practice known as 'stoozing.' This method, which involves borrowing interest-free and earning a return on the cash, was common before the 2008 financial crisis but faded as interest rates dropped. With savings deals now offering rates above 4.5% and a variety of 0% credit cards available, stoozing is once again feasible for individuals with good credit ratings and disciplined financial habits.

Adam French, of Moneyfacts, described stoozing as a 'relatively easy way to make a few extra quid if you’re organised and disciplined.' However, he cautioned that missing a payment could negate any gains, emphasizing the need for strict rules.

The Stoozing Process

Successful stoozing involves six key steps:

First, identify a suitable savings account. This account will hold the money saved by using a 0% credit card for everyday expenses. For maximum returns, especially for higher-rate taxpayers, a cash Isa is recommended as it allows earnings to be tax-free. Top easy-access cash Isa deals offer rates around 4.61%, often including a bonus for the first year. Standard easy-access accounts are also available with competitive rates for balances up to £5,000.

Second, find the right 0% credit card. The most effective cards for stoozing are those offering 0% on purchases for an extended period. These cards allow spending up to the credit limit without incurring interest, provided at least the minimum monthly payment is made. Setting up a direct debit for the minimum payment is advised to avoid losing the interest-free period. Credit limits vary based on individual financial standing and credit rating, with average limits for 0% cards often lower than standard credit cards.

Third, use the card for everyday spending. All regular expenditures should be made on the new 0% credit card. Instead of paying the balance in full each month, only the minimum payment should be made, allowing the balance to accrue.

Fourth, transfer the saved money. As spending accumulates on the credit card, the equivalent amount that would have been spent from a current account should be transferred into the designated savings account or Isa. This allows the user to earn interest on the borrowed funds.

Fifth, consider applying for a second card. Once the limit on the first card is reached, and savings are growing, applying for a second 0% card can further increase potential profits. It is crucial to use 'soft search' providers when applying to avoid negatively impacting credit ratings. Spacing out applications can also improve acceptance chances.

Sixth, plan for repayment. The money set aside in savings must be preserved to pay off the credit card balance before the interest-free period expires. Missing this deadline can result in significant interest charges. For those wishing to continue stoozing, transferring the balance to a 0% balance transfer card is an option, though this often involves a transfer fee that can reduce overall profit.

Potential Earnings and Risks

Potential earnings from stoozing depend on spending habits and credit limits. For example, using three credit cards with a £3,000 limit each and maxing them out over six months, while depositing the cash into a 5% interest savings account, could yield approximately £750 in profit over two years, assuming each card is held for its full 26-month interest-free period before being paid off.

However, risks are associated with stoozing. The ease of spending on 0% cards can lead to overspending if funds are not diligently transferred to savings. Lenders may also view high credit card debt negatively when assessing mortgage applications. Financial experts recommend having an emergency savings fund before attempting to stooze.