The Walrus.biz

Stoozing

I’ve read a lot about Stoozing (also called Credit Card Arbitrage) and I think it’s a legitimate way to make money. The only catch is: you need to be incredibly good with managing debt.

What is Stoozing?
Borrowing money from credit card companies at 0% and investing that cash into a high-yield savings account, before paying off the original loan and netting the difference.

How does it work?
Stoozing requires you to open up a credit card which offers 0% interest (typically for 12 months) on balance transfers and cash advances. The cash isn’t spent, but is invested in a high-yield savings account offering a guaranteed return. After the introductory period is over you can pay off the original loan or transfer the balance to a new credit card which again offers “0% on cash transfers”.

Benefits of Stoozing

• Using other people’s money (OPM) to invest.
• Typically no upfront costs
• Can supplement your current income
• Has long-term potential of building/boosting your credit rating
• Plenty of offers out there for 0% on balance transfers

Risks of Stoozing

• If not managed properly, you could incur very heavy penalties on late payments.
• Spending the money and not having enough to pay it back at the end of the loan could leave you depleting your savings or owing a lot of money
• Opening up new credit cards will temporarily lower your credit rating
• The risk of mismanagement and neglect to repay the loan can negatively affect your credit card rating, leaving it hard to borrow in the future (i.e. mortgage).

How much can I make?
I found this Stoozing calculator online and you can enter in a number of variables to determine how much you could make.

My thoughts
This is a very clever way of making money. You’re essentially taking advantage of credit card offers to help you make cash on the side. I’ve often been asked: “Is this legal? It sounds like it’s against my morals”. First, it is obviously legal to open a credit card and request cash advances. People do it everyday. As far as the moral argument goes, forget about it. Credit card companies are purposely targeting you to open up cards with the hope that you will fail to pay and constantly run balances. That’s how they make money.Why not beat them at their own game while supplementing your income?

I plan on trying this out and I’ll discuss how it works out for me. My main problem so far is finding a credit card that allows me to take out a cash advance with 0% down instead of just a balance transfer. I run no balances on my credit cards so I need a card that will let me take out $10,000, for example, with no questions asked. This is called a Super Balance Transfer (SBT). You need only one card that allows a SBT transfer and these are a little harder to find. They seem to be more plentiful in England, where Stoozing originated.

Resources
http://en.wikipedia.org/wiki/Stoozing - Wikipedia article
http://www.stoozing.com/ - A stoozing guide and forum