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How to Make Money from Stoozing

How to Make Money From Stoozing

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Having fallen out of favour for a while due to a lack of suitable opportunities, the sideline-earning system of stoozing is back in the spotlight again!

Stoozing is a financial strategy that allows individuals to profit by leveraging 0% interest credit card offers. By using the interest-free periods, you can earn interest on borrowed funds without incurring additional costs.

Here’s a guide to effectively implementing a stoozing strategy…

1. Understanding Stoozing

Stoozing involves borrowing money through a credit card offering a 0% interest period and depositing that money into a high-interest savings account. The goal is to earn interest on the borrowed funds and repay the credit card balance before the interest-free period ends. This method requires careful planning and discipline to ensure profitability.

2. Steps to Implement Stoozing

Select a Suitable 0% Interest Credit Card

Begin by researching credit cards that offer a 0% interest period on purchases or balance transfers. Opt for cards with the longest interest-free durations to maximize potential gains. Ensure you understand any associated fees, such as balance transfer fees, which could impact your overall profit. A useful resource for tracking down cards with 0% interest-free offers can be found on the popular MoneySavingExpert website.

Use the Credit Card for Everyday Purchases

Instead of using your debit card or cash, utilize the 0% interest credit card for daily expenses. This approach allows your regular income to remain in your bank account. This money can then be transferred to a high-interest savings account. Note that you should never withdraw cash directly from your credit card as you will be charged interest on this and it may also adversely affect your credit score (see below).

Deposit Funds into a High-Interest Savings Account

Transfer the money that would have been used for purchases into a high-interest savings account. This strategy enables you to earn interest on funds that would otherwise have been spent. Regularly monitor interest rates using a platform such as MoneySuperMarket to ensure you’re getting the best possible return on your savings.

Make Minimum Monthly Payments

It’s essential to make at least the minimum monthly payments on your credit card to maintain the 0% interest offer. Setting up a direct debit can help prevent missed payments, which could result in losing the interest-free benefit.

Repay the Full Balance Before the 0% Period Ends

Before the end of the 0% interest period, ensure you repay the entire credit card balance using the funds in your savings account. The difference between the interest earned and any fees paid represents your profit.

3. Example of Potential Earnings

Let’s say you obtain a 0% interest credit card with a 24-month interest-free period and a credit limit of £5,000. You deposit the full £5,000 into a high-interest savings account offering an annual interest rate of 5%.

  • Year 1 Interest: £5,000 x 5% = £250
  • Year 2 Interest: £5,000 x 5% = £250
  • Total Interest Earned Over 2 Years: £500

Assuming there are no fees and you meet all minimum payments on time, your profit from stoozing would be £500, simply by leveraging the 0% interest period.

4. Calculating Potential Profits

To assess the potential gains from stoozing, you can use online calculators designed for this purpose. These allow you to enter details such as the balance to be transferred, the introductory period, balance transfer fees, and minimum monthly payments to estimate your profit. One such calculator is available at stoozing.com.

5. Risks and Considerations

While stoozing can be profitable, it’s important to be aware of potential risks:

  • Discipline Required: Failure to make minimum payments or repay the balance before the 0% period ends can lead to interest charges that outweigh your earnings.
  • Credit Score Impact: Applying for multiple credit cards can affect your credit score. It’s advisable to check your credit report before proceeding. And it may be best to avoid stoozing if you plan to apply for a mortgage or business loan in the near future.
  • Changing Interest Rates: Savings account interest rates can vary, potentially reducing your anticipated profits.
  • Fees: Be mindful of any fees associated with the credit card or savings account, as they can erode your gains.

6. Closing Thoughts

Stoozing offers a method to earn additional income by strategically using 0% interest credit card offers and high-interest savings accounts.

Success in stoozing hinges on careful planning, disciplined financial management, and a thorough understanding of the terms and conditions associated with the financial products involved. Always ensure that the interest earned exceeds any fees incurred to achieve a net profit.

As always, if you have any comments or questions about this post, please do leave them below.




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Ways to Prevent Scams from Reducing Your Savings

Ways to Prevent Scams From Reducing Your Savings

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Sadly scams of all kinds are on the rise at the moment, with older people especially vulnerable to them. Read on for some top tips on how to spot attempted scams and keep your money safe.

Scams

Scams are a growing problem in the UK, with millions of people being taken advantage of each year.

From fake investment schemes to phishing e-mails, scammers are constantly finding new ways to trick unsuspecting individuals into giving away their money or personal information. The financial impact of scams can be devastating, leaving victims with empty bank accounts and a damaged credit rating.

Over 12% of UK consumers have fallen victim to payment fraud over the past four years, with an estimated £1.2 billion lost to scams in 2021 alone. With so many people having their savings impacted by fraud, it’s crucial to know how to protect yourself.

This article will set out four practical ways to prevent scams from reducing your savings.

Be cautious of unsolicited phone calls, e-mails and text messages

Scammers often use the promise of quick and easy money to lure people into their schemes. They do this through unsolicited phone calls, e-mails and text messages. Elderly people are particularly vulnerable to these monetary scams as they may not have the same level of technological literacy to spot one. However, anyone can easily fall into this trap as scamming methods grow increasingly sophisticated.

To protect your savings, you must not disclose your personal or financial information if you receive suspicious communication. You can also report dubious messages to the Information Commissioner’s Office, which has the power to take enforcement action against those involved in the scam.

Use strong passwords and security features

The government’s Cyber Aware campaign was launched in 2021 in response to growing scam and cybercrime incidents in the UK. One central piece of advice from the  campaign is to use strong passwords and security features to prevent scammers from gaining access to your bank accounts.

For example, you can use a combination of  letters, numbers and symbols on passwords to make them difficult to crack. Two-factor authentication provides another layer of protection by requiring a second form of verification in addition to your password. These two measures can significantly reduce your risk of falling victim to a scam that can empty your savings accounts.

Familiarise yourself with the technology used by merchants

As technology continues to evolve in the UK, so do the methods scammers use to steal your hard-earned savings. One way to protect yourself is to understand the methods used by merchants for their transactions.

Case in point, mobile card machines are commonly used by restaurants, cafés and pubs to process payments on the go. These devices are held to compliance standards like the Payment Card Industry Data Security Standard or PCI-DSS, which ensures that the machine follows protocols to protect cardholder data. Similarly, online merchants use virtual payment terminals to process payments online. Because shopping fraud schemes are on the rise in the UK, familiarising yourself with the technology merchants use can ensure you only interact with trusted businesses to keep your savings safe.

Choose banks with comprehensive fraud protection

In the UK, many banks offer fraud protection services as a standard feature. However, it’s still important to do your research and check that the bank holding your savings has the necessary fraud protection measures.

The Financial Ombudsman Service website offers resources regarding local banks’ anti-fraud policies. Additionally, you can check for your bank’s participation in the ‘Confirmation of Payee’ scheme. This initiative aims to protect customers from Authorised Push Payment scams, a type of fraud that tricks consumers into making a payment to a scammer. Banks participating in this scheme can check the recipient’s name against the account details provided by the customer and ensure the money is being sent to the correct person.

Scams can have a devastating impact on your savings—the fruit of your hard work. By taking the preventative measures outlined in this article, you can be vigilant and reduce your risk of being conned by one.

As always, if you have any comments or questions about this article, please do leave them below.

This is a collaborative post.

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Cardeo

Cardeo – My Review of This Credit Card Management App

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Today I’m looking at Cardeo, a new, free credit card management app. It is designed to help save you money on your credit cards.

How Does Cardeo Work?

Cardeo brings together data from all your credit cards into a single app using open banking.

It then gives you insights into your borrowing and spending. Their payment plan works out how long it will take to pay off your cards. You can set a repayment target, decide how to get there, and repay all your cards through a single monthly payment (you can also use it with just a single credit card). Reminders make sure that you never miss a repayment.

You can change the payment plan as much as you like: edit the date, target or the monthly amount, make extra one-off payments, and pause/restart the plan as it suits you.

Cardeo works with most (though not yet all) UK credit cards. You can view the entire list here. All the most popular credit card providers appear to be covered, including Barclays, HSBC, Santander, MBNA, Virgin Money, and so on.

How Can Cardeo Save You Money?

First and foremost, payment reminders from Cardeo help you pay your cards on time each month. That way you avoid extra interest and late payment fees from your card provider. If – like me – you are prone to forget these payments on occasion, this is a valuable money-saving feature in its own right.

The Cardeo payment plan offers a choice of repayment strategies, including the so-called avalanche method. This repays the highest interest rate cards first (after minimum payments are covered). By this means you will minimise interest charges and pay off your cards in the shortest possible time.

Cardeo gives you insights into your credit card usage, helping you make smarter decisions about your spending and saving. Finally, Cardeo also offer deals from other parties which are designed to save you money.

How Does Cardeo Make Money?

As already mentioned, the Cardeo app is free to download and to use, with no in-app purchases or charges.

Cardeo say they make a small amount of money from deal providers each time a customer takes up a deal from the Cardeo app (e.g. a low-interest loan).

My Experience

I found downloading and installing the Cardeo app straightforward – I got mine from Google Play as I have an Android phone.

When you first open the app you have to put in certain details, including your full name and address, phone number (for log-in purposes), and so on. You may also be required to enter an email invitation code. All this took me maybe five minutes at most. I then saw the screen below…

Cardeo screenshot

After that, I clicked on ‘Add a Card’ and selected the name of my credit card provider, MBNA. I then had to follow a link to their website and log in with my usual online security credentials to authorize open banking.

Frustratingly, this took me a few attempts. MBNA required me to answer an automated call from them and enter a four-digit code on the telephone keypad to complete the process. Initially it told me I had got the code wrong, despite the fact that I had copied it from the MBNA site. I persevered, however, and eventually the card was linked to my Cardeo account 🙂

  • As a side note, I am probably not the ideal candidate for Cardeo, as these days I only have one credit card and use it just once or twice a year. The rest of the time, I use my bank debit card instead. I am in the fortunate position of having enough income/savings that I don’t need to borrow on my credit card. On the odd occasion I do use it, it is typically for larger purchases to take advantage of the extra legal protections you get with credit card purchases over £100.

Nevertheless, I am happy to confirm that everything in the Cardeo set-up process went smoothly for me, with the sole exception of the hiccup regarding authorizing open banking with MBNA. The latter wasn’t Cardeo’s fault, and has in fact happened to me before with MBNA. Hopefully you will be luckier!

My Thoughts

If you’re a regular credit card user, and especially if you pay interest on an outstanding balance (or balances), in my view Cardeo offers a great way to minimize the charges you pay and help reduce your debts as quickly as possible.

As I have noted before on Pounds and Sense, credit card borrowing can be very expensive, especially over a long period. So if you are in debt on your cards, it is important to take all possible steps to pay this off as quickly as possible, and Cardeo will certainly help you with this. It can also help build your credit score by ensuring you don’t miss any payments.

A further benefit is that Cardeo will save you administrative time and hassle. You simply make one monthly payment and this is automatically allocated by the app across all your credit cards.

I know some people are uneasy about open banking, and if this is a major concern then Cardeo may not be for you. Open banking is, however, now a well-established option allowing consumers to gain an overview of their financial products. If you’re trying to get (and keep) your finances under better control, this can only be beneficial. Cardeo require your permission to use open banking and you can remove this at any time. Your data is encrypted and your login details are kept hidden. You can read more about the security and privacy protections here if you wish.

As always if you have any comments or questions about this post, or Cardeo more generally, please do leave them below.

Disclosure: This post includes affiliate links. If you click through and download the Cardeo app or perform some other qualifying transaction, I may receive a commission for introducing you. This will not affect the product or service you receive in any way.

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Buy Now Pay Later

Buy Now Pay Later – What Is It and Should You Use It?

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Today I am looking at Buy Now Pay Later (BNPL). This is a retail payment option that has grown massively in popularity over the last year or two. It is most often used online but is also available at some physical stores (e.g. New Look).

I am indebted to my friends at HSBC UK for their assistance in researching this post (and the graphics). The stats in the article refer to an online survey of 1,000 people conducted by HSBC UK in March 2022.

What Is BNPL?

Most people’s first contact with BNPL comes when they are shopping online and it appears in the list of payment options.

As the name suggests, BNPL allows you to buy a product (or products) now and pay later. This typically involves paying a deposit followed by a short series of instalments. You may also be offered the opportunity to pay the entire sum after 30 days with no initial deposit.

So if – for example – the product/s in your basket cost £90, with BNPL you may be able to purchase with a down payment of just £30 and two further instalments of £30 at 30-day intervals.

One big attraction of BNPL compared with credit cards is that generally if you pay your instalments on time, you will not be charged interest. The BNPL firms make money by taking a commission from the retailer, which means they don’t need to charge anything to customers.

Another possible attraction of BNPL is that you won’t normally be required to complete a formal (‘hard’) credit check. You will just be asked a few quick questions and will be told there and then if you are eligible. The fact that you applied for BNPL won’t generally appear in your credit file or affect your personal credit score (whereas applying for a credit card certainly will).

  • This is likely to change in future, however, with greater regulation coming to the sector from 2023. Hard credit checks may be required from then on, in response to fears that BNPL is encouraging some people to spend more than they can afford.

BNPL is offered by a range of financial services companies, the best known of which in the UK are Klarna, Clearpay and LayBuy.

Who Uses BNPL and For What?

Research from HSBC shows BNPL has become the second most used form of finance behind credit cards (see graphic below). Women are more than twice as likely as men (43% v 21%) to use it.

Most used forms of finance

The HSBC survey found that BNPL was most popular among 25-34-year-olds, with nearly half saying they had used it in the past year (49%), followed by 18-24s (45%) and 35-44s (45%).

As regards what it is used for, the survey found that clothing was the most frequent purchase type with BNPL, followed by food & beverages, shoes, appliances & electronics, and games & toys. This is summed up in the graphic below.

What Is BNPL Used For?

What Are the Pros and Cons of BNPL?

In the HSBC survey, those using BNPL said they valued it over other forms of finance because of the ability to spread payments (20%). They found it quick and easy to use (15%) and more affordable (13%) – with 87% of people who had used it in the past 12 months saying they were likely to use it again in the next year.

  • BNPL is also popular among people who like to try before they buy (typically with clothing). By buying this way, you may be able to try your purchase without any monetary outlay and return it with no further commitment if you don’t like it.

Sixty percent of BNPL users in the HSBC survey did express some caution, however, saying one of the top three drawbacks was it was too easy to get into debt or overspend. One in five listed lack of availability as a key disadvantage (20%), while one in ten (12%) said the fact it didn’t build their credit score was an issue.

These concerns were also raised by those who hadn’t yet used a BNPL service – with 62% saying one of the main barriers to use was it appeared to be too easy to get into debt or overspend, and nearly one in three (30%) saying that was the primary factor.

My Thoughts

Thanks again to my friends at HSBC UK for allowing me to share their survey results and graphics.

With the current cost-of-living crisis, many of us are feeling the pinch at the moment. So it is easy to see the attraction of BNPL for helping budgets stretch a little bit further.

In my view, BNPL can be a sensible option if you need short-term credit and are confident you will be able to repay the money over the period specified. One big attraction is that most BNPL offers do not involve paying any interest as long as you stick to the terms of the agreement. Neither is using BNPL likely to affect your credit score (though it won’t help build it either). And, as mentioned above, payment-in-30-day offers can allow you to try before you buy without any up-front financial outlay.

  • Some BNPL firms also offer longer-term credit up to 18 months. A hard credit check is required for this and interest will be charged, so this is more like a personal loan. Interest rates tend to be high and you may end up paying back considerably more than you borrowed. I do not recommend going down this route, unless you really don’t have any viable alternative.

Of course, BNPL does have the potential for encouraging overspending and drawing you into debt you then find difficult to repay. If you miss any of the scheduled payments, penalty fees and/or interest may be charged and your credit rating may also be adversely affected. Ultimately, a debt recovery agency may be called in. If you think this is a risk, it may be better to wait and save up before making a purchase in the traditional way.

As always, please feel free to leave any comments or questions about this post below. I would also be very interested to hear from any readers who have used BNPL themselves. What did you use it for and why? And would you do it again?!

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Credit Card Borrowing Set to Boom

Credit Card Borrowing Set to Boom

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Today I am sharing some information and advice from my friends at Smart Money People, the UK’s largest financial services review site

With UK inflation now running at around 10 percent (and forecast to go even higher), many people are feeling the pinch right now. For the large number who have little or no savings to fall back on, borrowing may be their only option to make ends meet.

Research on Borrowing

New research undertaken by YouGov on behalf of Smart Money People shows that the UK’s adults will borrow £101.1 bn on new credit cards, loans, overdrafts and other forms of new credit arrangements in the next 12 months.

The company found that 71% of people currently have less disposable income than they would usually have on average per month due to the current rise in the cost of living. This is leading people to consider other ways to make ends meet:

  • Two-fifths (40%) of UK adults will have some form of credit over the next year due to the cost of living crisis (i.e. rising prices for fuel, energy and food).

  • Borrowers predicted they would look to borrow an average of £5,259 each.

  • 43% of people who will take out new credit are already worried about how they are going to meet the terms of their repayments.

  • A fifth (21%) of the adults who say they expect to take out a new form of borrowing in the next 12 months, will do so to cover day-to-day expenses. This is equivalent to 8% of the adult population as a whole, or 5.5 million people.

  • One in ten (10%) people borrowing over the next 12 months will do so to consolidate existing debts.

The bulk of this new borrowing is predicted to occur during autumn (15%) and winter (32%). A further 13% were unsure exactly when they would borrow but expect it to be when energy price rises affect them.

Smart Money People’s survey also revealed that the most popular type of credit in the next 12 months will be a credit card: 34% of expected borrowers say this will be their preferred method of credit.

Based on the survey, the other most popular types of borrowing in the next year are expected to be an agreed overdraft (17%) and Buy-Now-Pay-Later (15%), a relatively new form of credit where the method of payment is in instalments with low or no interest rates.

Twelve percent of people stated they would borrow from family and friends.

Other Findings

Other findings from the survey include:

  • 68% of people are more worried about their finances now than during the pandemic.

  • A quarter (25%) of people don’t understand how inflation and interest rates will affect their finances.

  • 36% of people are unsure whether they have the best financial products for the current situation.

Jacqueline Dewey, CEO of Smart Money People said: “We know that many people have very little, if any, savings to help them get through this period of high inflation, and if they have already made cutbacks, they have almost no choice but to turn to credit.

“Providers will do credit checks for some forms of lending but Buy-Now-Pay-Later schemes do not apply the same rules, and of course, family and friends don’t either, so it is entirely possible to accumulate a worrying level of debt very quickly.

“Anyone who needs to take out a new credit card or another form of credit would be wise to check out the company and the contract and not simply jump at the first provider who will lend to them. Take time to understand if they have good customer service and offer channels that suit your style of managing money.”

Guidance for Borrowers

Smart Money People offers the following guidance for people who are considering taking out a new form of credit:

  • Borrow responsibly: if you miss a repayment your credit score will be affected for six years.

  • Don’t simply borrow from the provider who will lend you the highest amount.

  • Check you understand the product: what you will owe and by when.

  • Does the interest rate look reasonable compared to other lenders?

  • You may be penalised if you pay back the debt early – understand the T&Cs.

  • Find out if the lender has a reputation for good customer service by checking ratings on a financial review site.

  • When borrowing from family and friends, make sure both parties agree on how and when monies will be repaid.

  • If you are struggling to make repayments, speak to the credit provider as early as possible to avoid defaulting on a payment.  They should work with you to find an affordable means to repay.

My Thoughts

Thank you to Smart Money People for their help in compiling this article, and in particular for their valuable tips and advice about borrowing sensibly.

I would say, though, that borrowing to pay bills should only ever be a last resort. At the risk of stating the obvious, any money you borrow will sooner or later have to be repaid, probably with interest. And credit card borrowing, once the interest-free period has elapsed, is one of the most expensive ways there is to borrow money.

if you’re worried about your finances, before taking on any type of credit, my top tip is to ensure you’ve done everything possible to maximize your income, minimize your expenditure, and budget smartly (using your existing resources to best effect, in other words). These are all subjects I cover regularly on Pounds and Sense, especially in the Making Money and Saving Money categories. By doing these things you may be able to reduce the amount of money you need to borrow, or even avoid the need entirely.

Remember, also, that the government has already set out a range of financial support measures, with more promised when a new prime minister is (finally!) in post. You can find a useful summary of support currently on offer from the government and local authorities on this official web page.

As always, if you have any comments or questions about this post, please do leave them below.

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