Six Steps to Successful Suffering: How to Make $750 in Two Years with a 0% Credit Card

High interest savings accounts are back and with them comes the opportunity to earn up to £750 over the next two years with the smart use of 0pc credit cards.

Borrowing interest-free and making the money back, called “stoozing,” became popular in the early days of online personal finance forums before the financial crisis.

The opportunity dried up then interest rates were cut to the bone after the crash and remained stuck there for years.

But the returns on savings deals paying more than 4.5%, combined with a decent choice of 0% credit cards, mean that earning a tidy sum this way is once again achievable for those with good credit and the commitment to sticking to the rules religiously.

Originally, absconding mainly involved opening credit cards that didn’t charge interest on balance transfers and putting the money in high-interest accounts.

But the new version targets credit cards that charge 0% on purchases for extended periods.

By using them for everyday expenses and saving the money you would normally have spent in a high-interest account, you can earn nice returns.

Adam French, from financial information provider Moneyfacts, says stoozing is a ‘relatively easy way to make a few extra pennies if you’re organized and disciplined’.

However, he warns that if you miss a payment you will wipe out all your profits – so ironclad rules need to be put in place.

Step one: Find a suitable savings account

Open a savings account that pays good interest on your ‘stooze pot’. This is the money you can set aside by putting all your expenses on a 0% credit card.

The best way to maximize returns, especially if you are a higher rate taxpayer, is to opt for one cash Yesbecause then you don’t pay taxes on your dormant money.

The best easily accessible cash Is deals come from Trading 212, with a rate of 4.61% including a 1.01% bonus for the first 12 months, and Moneybox’s rate of 4.57%, including a 1.12% bonus over 12 months.

On savings outside an ISA, higher rate taxpayers can earn just £500 in bank interest before paying tax on it, while basic rate taxpayers can earn £1,000. Taxpayers with an additional rate pay interest on all their savings.

Good standard, easy-to-access accounts include Spring which offers 5% on balances up to £5,000 and Cahoot 5% on £3,000. See the best deals in our tables at thisismoney.co.uk/save.

Step two: Find your 0pc credit card

For stoozen to work, you need the right credit card. The 0pc cards come in two forms: 0pc on purchases or balance transfers.

Start with a 0pc purchase card, which lets you spend money up to your credit limit without paying interest on your balance for a set period of time.

This option allows you to spend interest-free, but you must make at least a minimum monthly payment on the card or you will lose your interest-free period. It is best to set up a direct debit for each month.

The amount you can borrow and the period for which you can borrow depend on your own financial position, including your creditworthiness.

The average amount credit card users can borrow is just under £6,000, according to data analyst FICO, although 0pc cards tend to have a smaller limit.

Moneyfacts recommends applying for one of three ‘best buy’ 0pc cards from major banks to build your pot: TSB Platinum Purchase Card; Halifax 0pc purchase and balance transfer credit card; or Lloyds Bank Platinum 0pc credit card for purchase and balance transfer.

Each option gives you a spending period of up to 26 months, with limits varying.

For stoozing, the TSB card allows you to pay a smaller minimum 1% balance payment each month than the other two. Starting with this option will maximize your profits.

Step three: Spend on the card

Spend your daily spending on your new 0pc credit card as long as possible, but don’t pay it off at the end of the month.

Instead, pay only the minimum payment and keep the credit card balance.

However, minimum payments vary. For example, the TSB Platinum Purchase Card is 1% of the balance, while the Halifax 0pc Purchase Card is 2.5%.

Step four: Transfer your money

The crucial part of bending is being disciplined. As you spend with the credit card, transfer the money you would otherwise spend from your current account to your new savings account or Isa.

This should initially reflect your credit card balance going up to 0%, so you are essentially earning around 5% interest on the money you borrow for free from the credit card company.

Step five: Apply for a second card

Once you’ve exhausted the limit of one 0pc card and your savings are building up nicely, you may be able to earn more by applying for a second card and continuing the process.

However, if you do this, make sure you don’t ruin your credit rating. The trick is to make sure you start applying through providers who promise a ‘soft search’ on your account.

Most banks and credit card providers offer this, and it means you won’t get a black mark on your credit report if you’re rejected. Doing this and spreading out your applications can help with acceptance.

Use the new credit card in the same way as the first, and do it a third time to make the biggest profit.

Step six: Pay it off or roll over

You need to make sure you don’t touch the money you put aside to make the dormancy work. Once the free period on your credit card ends, you could be hit with huge interest.

Make sure you use the money in your savings account to pay off the balance on the card – and make a reminder in your diary to do this as soon as you take the card out so you don’t get penalized.

If you want to ‘steam up’ even further, try applying for a balance transfer card and roll over the 0% purchase card debt you’ve accrued onto it so you can build up savings.

However, in most cases you will have to pay a percentage of the balance as transfer fees, which will detract from your returns.

How much could you earn?

Your dormant pot winnings depend on what you spend and the credit limits on your card.

If you take out three credit cards with a limit of €3,000 each, you will borrow a total of €9,000.

Once a card reaches its limit, apply for a new one, maxing out all three within six months and keeping the money in a 5pc account.

As long as you remember to make a minimum payment and pay off each card at the end of the free period, according to Moneyfacts, you’ll get £750 in profit, taking into account the payments you had to make, if you hold on to each card for the 26-month interest-free period before paying off the balance.

But there are risks. Stoozen is free money for sensible people, but 0pc spending cards can make it tempting to spend money without putting the extra money in a savings account.

These cards can also make it more difficult to get a mortgage if a lender thinks you have a lot of debt.

‘Ideally you should have an emergency savings fund before you start struggling,’ warns Moneyfacts’ Mr French.