REVENGE IS SWEET - Making Money From Credit Cards (Credit Cards in general)

Member Name: Ali72

Product:	Credit Cards in general
Date:	10/11/05 (1202 review reads)
Rating:

Advantages: You need to be REALLY organised

Disadvantages: May trip up, negatively impacts your credit rating, not for the financially undisciplined!

I am very lucky, in that, even though I have been in debt in my life (having been a student so it was fairly inevitable) I have never been in really serious debt. This may be in part because my credit was SO poor that I never had a credit card until I started work. In general, if I couldn’t pay for something out of my cash, then I didn’t have it. I still find that a good principle to live by today. However, I know plenty of people who have had debt problems, and for many of them, including my husband, the debt started with credit cards (and ex-wives tee hee).

It seems that it is all too easy these days to get a credit card, with unscrupulous companies giving out cards with high credit limits to people who just don’t have the resources, or sometimes the plain common sense, to pay back what they borrow.

Having said that, I LOVE credit card companies – because I make money FROM them, not the other way around. My “hobby” is borrowing money on promotional deals, typically 0% interest for a fixed period of time, and depositing it into a high interest savings account. I make around £100 per month this way. Revenge is sweet.

There are a number of websites where you can get detailed instructions on how to engage in this activity, known by various names such as “stoozing” or “rate-tarting”. One of the best that I have found is the credit card discussion board on The Motley Fool website, www.fool.co.uk, which helpfully contains a “Stoozing FAQ” (click into any thread, and this will appear in the box on the right hand side). I won’t reproduce it here, because I don’t copy other people’s work, and because it’s also very long, but I do recommend that you read it if you are thinking of getting your hands on some free cash.

In order to succeed, you need to be a very organised person – the sort of person who makes lists, uses spreadsheets and never forgets birthdays. In short, you need attention to detail. Let’s face it, how many of you actually READ all those nasty little Terms and Conditions when you apply for a credit card? If you want to “stooze” though, you must read every word, because you are stepping into the credit card companies’ arena – you are playing by their rules. One of the most essential things is not to miss any minimum payments, as this will incur a financial penalty, and may result in the promotional rate being cancelled, as well as negatively impacting your credit rating – which will affect your ability to get new cards. You can set up a direct debit for each card out of your current account, but should also check that the payment has gone each month. But of course, the MOST important thing is: DON’T SPEND THE MONEY. If you are the sort of person who can’t resist temptation, then stoozing is not for you. Don’t borrow the money in the first place. Otherwise, put it into a savings account, make a careful note of the date that the promotional rate runs out, and ensure that you pay off the full balance in plenty of time. I use an ING account linked to my current account to move money into and out of, because they have a consistently good rate of interest and it’s easy to do via Internet banking.

Now, you may be wondering how you get the money from your credit card into a bank account. With many cards, you can write a cheque, but you will be charged for the privilege. What you need, therefore, is a card that allows you to transfer a balance into a bank account. Fortunately, Egg and I believe MBNA and Mint allow you to do this (again – check those terms and conditions). So they are good cards to start with, and when you get a new card, simply transfer the balance onto the first one (say, Egg) and then transfer it onto your bank account. I have found that it is OK to put an Egg card into a positive balance and then transfer it back out, although they may freeze your account if you do this with very large amounts (greater than £10,000).

Some other general tips are to make sure that you close cards when you have finished with them, after the promotional period has expired, and to keep an eye on your credit by getting reports from the credit agencies Experian and Equifax (www.Experian.co.uk and www.equifax.co.uk). You should also be aware that having a lot of available credit may negatively impact your credit rating, so you may not want to do this if you are, for example, about to re-mortgage your house. It can take a couple of months, or even longer, for the fact that a card is now closed to filter through to your credit report (and sometimes you may need to nudge the company concerned to pass on the information).

Finally, also remember that it is fraud to lie on a credit card application, so don’t do this to try to obtain a larger credit limit – it just isn’t worth the risk.

Happy money making while the deals last!

Summary: Can be a nice little earner