Easy money making idea....

[chriscool]

So this is related to stoozing..

'Stoozing is a slang term used to describe the act of borrowing money at an interest rate of 0%, a rate typically offered by credit card companies as an incentive for new customers. The money is then placed in a high interest bank account to make a profit from the interest earned. The borrower (or "stoozer") then pays the money back before the 0% period ends. The borrower does not typically have a real debt to service, but instead uses the money loaned to them to earn interest. Stoozing can also be viewed as a form of arbitrage.'

My idea would be to do this but then for even more profit - not just do it with companies/banks etc.. but with online social lending sites. For example, with Zopa you can lend money at 8% to 10% ish but I've seen other sites that allow you to borrow the same sort of money for only 5-6% therefore making a profit? like buying money cheap and selling it high?

So imagine if you could do this with £100,000's over time and say make a profit of 3-5% each year what an ace source of passive income?

[SnerpGoodWord]

The risk-free rate on GBP is less than 1%. If anyone's paying you 3-5% interest it's because there's a non-trivial chance you won't get your deposit back.

The general idea isn't bad, but the devil is in the details and you won't be able to make much.

[Midnite]

My issue would be with the people your lending money to. There is no solid guarantee you will be able to be repaid before the 0% credit card term comes to an end. For every month your borrower can't repay on time, it translates into lost profits on your behalf. With a defaulter, not only would you have to repay the initial amount taken out, but the interest for every month the money isn't paid on time (which most credit cards charge an insane 17-22% for cash withdrawals).

Let's say you re-lend your 0% amount out to somebody on 5% interest for 6 months (credit card offer being 6 months interest free). At 22% p/a credit card interest, it would take less than 3 months for a bad borrower to eat away at all your profits gained from the interest kicking in on your card.

Putting that to one side, you would have to open 20-30 credit cards (with a limit between 5k-10k each) to start making a decent side income out of it.

[Rezzy7]

Even better:

• Add fine print to your payment check that says that by cashing your check the bank agrees to your terms.
• Your terms state that you charge a $29 fee any time you pay before the due date.
• Pay your credit card bill early.

[GregD]

This is far too dangerous based on what I know because simply, sooner or later one of the people you lend money to will not pay you and you will have to hire a company to chase after him or her or do so yourself and there is no guarantee that you will succeed whereas on the opposite side the person can just say "don't have any money to pay you back" and may even be willing to go to prison or simply declare bankrupcy and you are out.

Instead, if you want to earn 3-5% annually from a sum of 100,000 there is a FAAAAAR simpler way - just buy a small studio or 1 bedroom apartment and rent it out. The annual income is about 3-5% in my area.

[VinceG]

Your credit rating would drop from having so many of your cards maxed out that eventually, you'd lose access to new 0% debt.

[VinceG]

Originally Posted by Rezzy7

Even better:

• Add fine print to your payment check that says that by cashing your check the bank agrees to your terms.
• Your terms state that you charge a $29 fee any time you pay before the due date.
• Pay your credit card bill early.

You can't add terms to a check, as a check is not a contract.

[Rezzy7]

Originally Posted by VinceG

Your credit rating would drop from having so many of your cards maxed out that eventually, you'd lose access to new 0% debt.

From what I know about consumer credit, this is correct. Depends how long before that info shows up on your credit report, and you'd have to take steps to avoid it. I think they like it though, if you have some balance, but not maxed or near-maxed.

Originally Posted by VinceG

You can't add terms to a check, as a check is not a contract.

I wasn't being serious.
(But I've seen checks with fine print on the back, under the signature line, attempting to bind the endorser to unfavorable terms, and I've read news warning consumers about them, though it was quite some time ago. Maybe laws were enacted to prevent the practice.)