Even Better Than Stoozing

Cashback cards are an alternative to 'stoozing'. Used properly, you can make yourself a bundle of free money.

'Stoozing' is a damn curious word. It's when you get a 0% on balance transfers credit card and transfer the balance to a bank account that pays a high interest. Before the introductory 0% period expires, you pay off the credit card, leaving you with the interest you've earned. Thus, you get free money.

Problem is, stoozing is getting harder to do. To start with, few cards let you credit bank accounts directly. Secondly, most credit cards now charge a fee of 2-3% to transfer a balance, which means if you're not careful you may actually make a loss! There are a few cards left that don't charge a fee, but none of them have 0% deals lasting more than 6 months, which means you'd have to switch cards frequently, which is easier said than done.

So stoozers are getting less and less for more and more effort, and many have decided it's no longer worth it. If you find this is happening to you, don't despair! You've earned your spurs, so why not hang them up and take the stoozing retirement option, namely cashback credit cards?

With most such cards, you usually receive cashback at the end of the calendar year, or once a year on the anniversary of the card. There are lots of very similar cashback cards offering 0.5% to 1% on all purchases, but the best cashback card at the moment is.Oh, I wish it was that simple! The thing is, it depends on how you spend. Even so, I reckon there are three that stand out.

GE Money claims that its computers can track purchases in any shop and work out if it's a food or petrol purchase, which is why it can pay an astounding 3% on them. It pays 0.5% on all other purchases. Not surprisingly then, this is my favourite cashback card, because food and petrol can add up to be some of our greatest bills, as I'm sure you're very aware!

But consider your other expenses as well. If you buy a lot of music, or electronic stuff, or if you spend a lot on holidays, you could do better with one of the other two cards: the Morgan Stanley Platinum Mastercard and the American Express Platinum Credit Card. Take a look at this comparison table:

Credit card	Cashback	Promotion	Cashback paid?	£1,800 of food in a year	£1,200 travel
Morgan Stanley Platinum Mastercard	1% on the first £2,000 of purchases in a year; 0.5% on >£2,000-£20,000.	Triple cashback until 01/01/06	Annually	£22.50	£16
American Express Platinum Credit Card	0.5% on the first £3,500; 1% from >£3,500 to £10,000; 1.5% on >£10,001	3% cashback on all purchases for the 1st 3 months	Annually	£20.25	£13.50
GE Money Everyday Card	3% on petrol and food purchases; 0.5% on all other purchases.	None.	Bi-annually	£54	£36 (petrol only)

The ultimate post-stoozing technique would be to get a combination of these cards if you can. Use the GE Money card for food and petrol, then one of the other cards for your remaining purchases. The Morgan Stanley Platinum Mastercard will be best for most people, but, if you spend close to, or more than, £10,000 on your credit card each year, you'd do better to get the American Express Platinum Credit Card instead.

There are two other things to bear in mind. One: you'll need a great credit record to get these cards, so go for something less ambitious if you don't think you qualify. Two: as always, remember to use your cards for one purpose, e.g. don't use a card for both purchases and balance transfers. If you do, the small print could cost you a fortune!

> Compare credit cards through The Fool.