What is stoozing?

It's always good to get something for nothing, but what if you could make money from it? That's exactly what some savvy borrowers are doing through a process known as 'stoozing', but how does it work, and how can you take advantage?

Stoozing is a clever way of moving money around to benefit from high interest rates without having to lock any of your own cash away in a fixed rate savings account. It sounds impossible, but it can work: borrowers take out a 0% money transfer offer on a credit card and use the cash to fund a high interest current account, which they can then leave untouched to benefit from a high interest rate.

If they pay off the credit card balance when the 0% offer ends – which they could do with the original sum they borrowed – they're left with a nice little pot of interest, without committing any of their income or savings. This means you could quite literally get something for nothing, but as with anything that sounds too good to be true, it's important to go about it the right way.

The first thing you need to think about is the money transfer fee. Our data shows that there are about eight cards that allow for money transfers but don't charge a fee at the moment, so this cost would need to be taken on board and compared against the potential gains of putting the money in a high interest current account.

You'll need to consider the restrictions on these accounts, too, with many coming with monthly funding requirements, fees and a maximum amount that interest can be earned on. And remember to make at least the minimum repayment on the credit card, too, otherwise the 0% interest deal could be revoked, and you wouldn't have achieved a thing.

Despite the potential drawbacks, stoozing could still be a viable way to earn a bit of extra interest in a low rate environment, but you'll need to make certain you're the right candidate for the job.

• Stoozing is most appropriate for consumers who already have savings and a decent income. This way, they can leave the deposit untouched in a high interest current account, while also meeting any minimum funding requirements to be eligible for interest, and at the same time managing repayments on a credit card.
• Before applying for a card, make sure you have a good credit history by checking your credit report to give yourself the best chance to get the best possible deal (and remember that opening a bank account and credit card leaves marks on your credit history, so don't even consider it if your score is already suffering).
• Keep your current account in credit – some have funding requirements and need a minimum amount of active direct debits, so don't fall behind on any criteria.
• While you can have more than one current account at any time, be mindful of how you are moving your money around, as some banks may frown upon this activity and some may even become suspicious that it's fraudulent.
• Make sure you keep up with minimum credit card repayments.
• If you're looking at repaying the card debt in 12 months, make sure the deal you have has an interest-free period of this length as a bare minimum, and don't be tempted to spend more on the credit card.
• Any personal debt, such as loans and credit cards, can count against you in terms of your credit score, so keep this in mind if you're hoping to apply for a mortgage anytime soon.