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What is 'stoozing'?: Martin Lewis shares tip that earned him hundreds - and is making a comeback

Martin Lewis, pictured in May, says only financially savvy people should try stoozing. (PA)
Martin Lewis, pictured in May, says only financially savvy people should try stoozing. (PA)

Consumer champion Martin Lewis has shared a savvy technique that earned him hundreds of pounds per year.

The personal finance guru shared the strategy, known as "stoozing" on social media, adding that the practice has been making a comeback.

He explained how he signed up for a 0% interest card from the online bank Egg in the early 2000s, borrowed £5,000 and put it in an account with the highest interest possible - which happened to be with the same bank - enabling him to make £300 a year.

"So I earnt 6% [£300/yr] on money it lent me for nowt. Sheer poetry!" he added.

The idea of sitting back and making free money using money given to you by someone else may sound like a no-brainer, but it's not for everyone, as Lewis explains.

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He says stoozing is "only for those who are debt-free and financially savvy", adding: "If you're not avoid it as mistakes can be costly".

Lewis say it is "risk-free" if it's done correctly, but that those who do decide to try it must remain organised and on the ball at all times, adding: "Stoozing isn't for the forgetful, ill-disciplined or inattentive."

This technique is only really suitable for people who with a decent credit history and with no credit card debt, the financial adviser tells MoneySavingExpert.

Here, Yahoo News explains how stoozing works, the risks involved, and why it's making a comeback.

What is stoozing?

The principle of stoozing is borrowing money via a 0% interest credit card and then placing it in a savings account to earn interest.

These credit cards are often offered as a promotion to customers with good credit for an agreed period – but keep track of when that offer expires to avoid additional debt.

Once you have your card, start using it to pay for your everyday spending instead of your regular current account.

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This should allow you to save up money in your current account, but remember to set up a direct debit to repay the required minimum monthly repayment.

Missing these payments could result in the interest-free offer being withdrawn - which could land you in more debt, GoCompare warns.

London, UK
With the Bank of England raising interest rates for several months in a row, it makes sense to save at the moment. (Getty)

Every month you can transfer any spare money left over in your current account to a savings account offering the highest interest rate possible.

Use your savings to clear the balance of your credit card when the 0% interest offer comes to an end - after which you should have profit from the interest you earned.

Instead of clearing the debt at the end of the 0% period, you can take out a 0% balance transfer credit card and continue saving for even longer.

Try to avoid cards with transfer fees, and as mentioned, continue keeping tabs on your repayments and when offers expire.

stack of multicolored credit cards, close up view with selective focus
Martin Lewis has shared a clever technique to earn free money using credit cards and savings accounts. (Getty)

Why is stoozing making a comeback?

It may not be as profitable as it used to be, but with interest rates being raised to 4.5% in May - the 12th consecutive rise in a row - it makes more sense to save at the moment.

This could explain why stoozing is making a comeback, but as explained above there are some major caveats to consider.

Stoozing will mean you'll have credit card debt, so if you have a mortgage application or important credit card application to make, it may be best to hold off.

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Avoid withdrawing cash from your credit card also, as this can impact your credit score and potentially incur additional interest from your credit card company.

Stoozing also requires a fair amount of research to choose the best possible deals. Here, MoneytotheMasses has put together guides on the best 0% cards and easy-access savings accounts.