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Maximising Your Money with 0% Overdraft Stoozing
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Stoozing is a smart financial strategy that allows you to make the most out of 0% interest offers, effectively earning money by borrowing at no cost and then investing it in high-interest accounts. This method can be particularly beneficial for students who are in a strong financial position and don't need to rely on their overdraft for day-to-day expenses. Many high street banks offer students a 0% overdraft, with the majority extending this benefit throughout the entire duration of their university studies. This provides an excellent opportunity to use the funds strategically to generate interest, rather than simply sitting unused in your account.
It's not just students who can take advantage of stoozing. Members of the public can also access 0% overdrafts (see the attached table for details). By borrowing at no cost, you can deposit the funds into a high-interest savings account, effectively earning interest on money that isn’t yours—creating a risk-free profit.
Current 0% overdrafts
| Account | 0% Overdraft | Who Can Get It | Key Details |
|---|---|---|---|
| First Direct 1st Account | £250 | Most UK adults | The first £250 of an arranged overdraft is interest-free. Anything above this is charged at 39.9% EAR variable. |
| Nationwide FlexDirect | £50 | UK residents aged 18+ | The first £50 of an arranged overdraft is interest-free. Anything above this is charged at 39.9% a year compounded (variable). |
| Nationwide FlexAccount | £50 | UK residents aged 18+ | The first £50 of an arranged overdraft is interest-free. Anything above this is charged at 39.9% a year compounded (variable). |
| Nationwide FlexPlus | £50 | UK residents aged 18+ | The first £50 of an arranged overdraft is interest-free. FlexPlus has a monthly account fee. |
| HSBC Premier | £500 | Customers meeting Premier eligibility | The first £500 of an arranged overdraft is interest-free. Borrowing above this is charged at 39.9% EAR variable. |
| HSBC Bank Account | £25 | Eligible UK customers aged 18+ | The first £25 of an arranged overdraft is interest-free. Borrowing above this is charged at 39.9% EAR variable. |
| Nationwide FlexStudent | Up to £3,000 | Eligible students | Up to £1,000 in year 1, £2,000 in year 2 and £3,000 from year 3 onwards, interest-free. |
| NatWest Student Account | Up to £3,250 | Eligible students | Apply for up to £500 initially, up to £2,000 from the second term of year 1 and up to £3,250 from year 3 onwards. |
| RBS Student Account | Up to £3,250 | Eligible students | Apply for up to £500 initially, up to £2,000 from the second term of year 1 and up to £3,250 from year 3 onwards. |
| HSBC Student Bank Account | Up to £3,000 | Eligible students | You could get up to £1,000 when opening the account, with the interest-free limit potentially rising to £3,000 by year 3. |
| Santander Edge Student | Up to £2,000 | Eligible students | £1,500 interest-free in years 1 to 3, potentially increasing to £2,000 by year 5. |
| Co-operative Bank Student Account | Up to £2,000 | Eligible students | £1,400 in year 1, up to £1,700 in year 2 and up to £2,000 from year 3 onwards. |
| Lloyds Student Current Account | Up to £2,000 | Eligible students | Up to £1,500 interest-free in years 1 to 3, rising to up to £2,000 in years 4 to 6. |
| Halifax Student Current Account | Up to £2,000 | Eligible students | Up to £1,500 interest-free in years 1 to 3 and up to £2,000 in years 4 to 6. |
| Bank of Scotland Student Account | Up to £2,000 | Eligible students | Up to £1,500 interest-free in years 1 to 3 and up to £2,000 in years 4 to 6. |
| Barclays Student Additions Account | Up to £1,500 | Eligible students | Up to £500 initially, £1,000 in year 1 and £1,500 from year 2 onwards, interest-free. |
Credit card stoozing
Another common stoozing method involves using a 0% credit card with a lengthy interest-free period, such as 12 months, to make purchases you'd need to pay for anyway. Instead of using your own cash, you put the purchase on the card and then deposit the equivalent amount of cash into a high-interest savings account. This allows you to earn interest on your money while gradually paying off the credit card balance over the interest-free period.
Summary
Currently, there are a variety of high-interest savings accounts available, often linked to current accounts. For example, First Direct offers a savings account with an impressive 7% interest rate, though there's usually a limit on how much you can deposit each month. Even some current accounts, like Kroo, are offering competitive interest rates, with Kroo currently paying 4.1% on your balance. By carefully choosing where to place your money, you can maximise the returns from stoozing.
Whatever stoozing strategy you choose, it's crucial to stay organised, particularly with expiration dates. Failing to pay off your balance before the 0% period ends can result in hefty interest charges, which could negate any profits you've made. For those seeking a safer alternative, instant cashback offers may be worth considering. This method provides cashback on purchases right away, reducing the risk of missing deadlines or dealing with high interest rates.
Stoozing example
To illustrate how stoozing can work in practice, consider the example of John Saver. John obtains a 21-month 0% interest credit card with a £5,000 limit. He typically spends £1,250 each month, so he decides to charge all his regular expenses to the card. Each month, John transfers the equivalent amount of cash from his bank account to a 5.15% easy-access savings account, while only making the minimum payments on the credit card.
After a little over four months, John has nearly £5,000 saved in his high-interest account, which continues to accrue interest while he makes the minimum payments on the card from a separate account. When the 0% interest period on the card ends, John pays off the remaining balance in full. After reimbursing himself for the minimum payments he has made, he’s left with a profit of £400 in his savings account. This is a perfect example of how stoozing, when managed correctly, can turn borrowed money into a source of income.
Stoozing offers a creative and low-risk way to enhance your savings, provided you stay disciplined and aware of the terms of your credit agreements. Whether you're a student taking advantage of a 0% overdraft or someone looking to maximise returns with a 0% credit card, the key is to stay organised and mindful of expiration dates to ensure you reap the rewards without any unexpected costs.