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By Amy Rich
Staff Writer, 26 February 2008
How many of us do all of our grocery shopping in the one supermarket, every week of the year, year after year? If your local store is a Tesco or Sainsbury's then you might just want to consider stoozing off your groceries - that, in simple terms, is making money from your grocery spending by putting it all on credit!
Sound odd? Not really. If you're after a new (and completely legal) way of making money, and you’re an organised sort of person, then stoozing could be the answer.
Credit cards offer all sorts of incentives to get you to sign up - but the Tesco and Sainsbury's credit cards could really help you out if you categorically do all of your supermarket shopping in one of these stores.
How it works
Stoozing is basically borrowing money from a lender at a low rate of interest and then saving that money in an account that pays out a higher amount of interest. In other words, it's working an arbitrage between banks.
To actually turn a profit from stoozing it's very important to make sure that the cost of borrowing money from one bank is less than the money made back from saving it with another bank.
Credit card interest rates tend to be a lot higher than the best paying savings accounts, so stoozing can only be done on promotional offers where a 0% interest rate is available for a period of time.
And, of course, the longer the 0% borrowing is available, the longer you can keep the borrowed money in a savings account earning you interest.
Here's the deal:
So, sign up to one of these credit cards and instead of reaching for your cash or cash card at the checkout, pull out your new Tesco or Sainsbury's credit card and pay for the weekly shop on this.
This frees up the money in your bank account. If it's sitting in a low interest account and you can't be bothered to change it - then forget it, this stoozing malarkey isn't for you. If, however, you already have a high interest savings account or you're prepared to set one up (try Kaupthing's Edge for a 6.5% interest rate on balances over £1000. It also guarantees to beat the Bank of England’s base rate until February 2012 by 0.30%) then stoozing could be that nice little earner you're after.
So, now you're transferring all the money you're saving into a high interest account all you need to do is make the minimum repayment on your Tesco or Sainsbury's credit card each month.
When the 0% period comes to an end, pay off the Tesco or Sainsbury's credit card in full with the money put into savings and pocket the interest you've made on it. Simple.
Top tips to remember as you go:
- Stoozing is for the organised.
- Make sure you only use your Tesco/Sainsbury's credit card on goods from their stores as other items accrue fees.
- Make sure you're saving at least the amount you're spending, and don't be tempted to splash out with the money you've saved.
- Once the 0% deal is up - at the end of 12 months for Sainsbury's and 13 months for Tescos make sure you pay it all off from the money in your savings account.
- Never withdraw cash from your store credit card as they'll charge you for the privilege (e.g. 3% on Sainsbury's credit card with a £3 minimum).
Where to be weary!
The Tesco and Sainsbury’s credit cards are perfect for grocery spending. They do also have a few other offers - like Sainsbury's 0% on balance transfers for 10 months and Tesco's 0% for 13 months on balance transfers - but with a 2.5% transfer charge). Both Tesco and Sainsbury's also offer 0% on purchases for 3 months but it's not worth going there when you consider the allocation of payments clause.
A ha, the allocation of payments clause! Yes, it's a bit of a mouthful and will only benefit the credit card company - never you. What it means is, if you aren't paying your balance off in full each month and you have used your card to buy products outside either a Sainsbury’s or Tescos, even though you get 0% on these purchases for 3 months, after that, instead of your minimum repayment going towards this purchase - it will, instead go towards the 0% on your in-store grocery shopping - which incurs no fees until either 12 or 13 months is up (depending on the card you choose).
Plain and simply, you'll end up paying interest on the non-store purchase - which you don't want to do. So the best thing you can do is not to use this credit card for non-store purchases. Then, and only then can you sleep safely in the knowledge that the allocation of payments clause won’t be bothering you any time soon. If it helps - make a paper wallet for your store credit card with, "Only EVER to be used in Tesco/Sainsbury's" written on it, place the credit card inside and slip into your wallet.
Why not do it on all spending?
Of course you can do it on all spending, however there are few 0% purchase credit card deals offering 0% on all purchases for a decent length of time.
The HSBC credit card does offer 0% on all purchases for 12 months - which is the market-leading offer.
After this, however, the deals reduce; with some cards offering 9 or 6 months, and then the majority of cards on the market offering just 0% for 3 months.
To really make a good profit from purchase stoozing, it's vital that the cheap borrowing at 0% lasts for long enough to make a good amount of interest from saving it; typically we're looking at a year here.
So where you can stooze off your purchases for a year with HSBC, Tesco and Sainsbury's offer 0% on their supermarket spending for 13 and 12 months respectively. And of course, the supermarkets are generally where we spend the largest portion of our income after our mortgage or rent.
Pocket the profit
Now, not only are you raking up a nice little pot of interest in your savings account, you'll also be earning a stash of Nectar or Tesco Clubcard points too - which also translate to savings in your chosen store. Result!
Stoozing works - many people do it successfully - many don't. But if you follow this simple guide and you're definitely an organised person and can keep your branded credit card purchases to the weekly supermarket shop only, then try it. You'll soon be reaping the benefits in interest.
 Tesco Clubcard credit card review
Tesco Bonus credit card review
Sainsbury's Bank credit card review
Compare 0% purchase credit cards
 Credit card guide
Credit card features archive
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