Money expert Martin Lewis has revealed the free money trick (Image: ITVX)
Money expert Martin Lewis has shared a bank-beating way of making free money using a little known method called ‘stoozing’.
On his latest Martin Lewis Podcast, the Money Saving Expert founder revealed how one of his callers, a couple who follow all of Martin’s advice, are making at least £1,200 a year of free money.
Their trick is a completely legal method called ‘stoozing’, which Martin explains is only for people who are very money savvy.
To do this, you need to borrow money that you don’t need, using 0% offers such as introductory credit card offers, and then save the money in a high-interest savings account.
For example, you could take out a 0% credit card, do your normal spending on that, and then save the same amount of money in a high-interest savings account.
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Then, at the end of the 0% period on the card, take the money from savings and pay off the card. You’ll keep the interest you earned, which is effectively free money from the borrowing.
On his BBC Sounds and Spotify podcast from Monday, April 20, Martin heard from callers Alex and Millie, who opened a high interest savings account and made more than £2,000 from bank switching on top.
They said: “We looked into stoozing, we’ve pooled about £30,000 so far.”
Martin said: “For those who don’t know, a stooze pot is where you deliberately create artificial 0% debt that you don’t need, so you borrow money at 0% and then you save it at high interest.
“So if you’ve got £30,000 at 0% and it’s complicated in how you do it and it’s only for people who are financially savvy, it’s called stoozing, but with £30,000 at 4% that’s £1,200 a year gained.
“That’s really well done.”
Martin’s MSE website adds more detail about the trick. It says: “Loads of cards lend new customers money at 0%. By grabbing this cash then saving it at as high a rate of interest as possible, you’re earning interest on money they’ve lent you for free.
“In stoozing’s heyday, the amounts people could get were huge.
“The biggest stooze-pot we heard about was £80,000 of 0% credit card debt (multiple cards, continually rolling onto 0% deals) which saved the ‘stoozer’ nearly £5,000 a year as the money was offset against their mortgage.
Though you can’t match those figures now, it’s still possible to make a bit of free cash.”
But MSE warns that you need to be disciplined for this to work, adding: “This requires discipline, and is absolutely NOT a way to spend more than you would have – it’s a money-making recipe. So don’t overspend and never breach the card’s credit limit.”