What’s the best way to stooze (pervert 0% cards to make money)? | Top savings for 17yr-old | Will I lose Child Benefit?

0:00This BBC podcast is supported by ads outside the UK.

0:29CFO. LinkedIn has a word for that. Bull spend. Now you can invest in what looks good to your CFO. LinkedIn ads generates the highest ROAS of all major ad networks. You'll reach the right buyers because you can target by company, industry, job title, and more. So cut the bull spend. Advertise on LinkedIn, the network that works for you. Spend$250 on your first campaign on LinkedIn ads and get a 250 credit for the next one. Just go to linkedin.com slash broadcast. That's linkedin.com slash broadcast. Terms and conditions apply. Dinner time. It's where little moments are cherished. With Blue Cash Preferred, get 6 % cash back at US supermarkets and bring everyone together.

1:18I did say everyone. Learn more at americanexpress.com slash explore-bcp. Terms and cash back cap apply with Blue Cash Preferred.

1:27Martin Lewis:regular listeners prepare yourself for a shock i don't feel you want to be paying a fee at any point in this via the magic of podcasting i'm gonna go and do those numbers now i've got a question for you okay i'm blushing already carry on yeah way more important than any of that has she dropped but we lost her oh no hello and welcome to the cunningly named the martin lewis podcast. I do wonder what that's going to be about. And this is our question type episode, where you are ESQ's extra savvy questioners, get to ask me your questions on absolutely anything and everything, open bracket, within reason, close bracket.

2:05Martin Lewis:This week you asked me, Martin, what's the best way to stews? For those of you who don't know, that means how do I get money off a 0 % credit card so I can save it and earn interest on the money they've lent me for now? My child is 17. Should she use a children or an adult savings account? Will I lose child benefit if I only earn over the limit for some of the year? I'm nervous giving my 18-year-old a credit card for his first trip abroad. What are the alternatives? And finally, I got a surprise with a special guest last call. Play the theme tune. I got meals. I gotta pay. So I'm gonna work, work, work, work, work I got a mouth, I got a feet So I'm gonna make sure everybody eats Hello everybody and welcome to our question time edition of the podcast where you get to ask me questions on anything and everything within reason.

3:12But regular listeners, prepare yourself for a shock.

3:17Martin Lewis:because for the next few weeks, there's no Professor Sir Matthew Burnham Esquire. Instead, we've got an upgrade or a downgrade. I'm staying absolutely neutral. You can decide this one yourselves. I don't want to get involved in the competition between the two of them. We have PPS here. No, not Parliamentary Private Secretary, but podcast producer Simon, who normally does the producing on the big issues version of the podcast, but you're joining us for question time for the next few weeks. How are you feeling about it, Simon? How are you feeling about the big game? Well, I'm absolutely delighted to be here.

3:51Matt's had so many names on this podcast. I mean, maybe you'll have to change him as Judith Chalmers at this rate, won't we? We've got so many holidays coming up. I haven't seen any of these badges yet. I must admit my plan was that the moment they came in, I was just going to steal one anyway. But at least by doing this podcast, I am actually entitled to one.

4:07Martin Lewis:I'm going to say that you can officially have a badge, one of our ESQ badges, extremely savvy questioners badges that anybody who calls up or does a voice note for the podcast gets. If your question is read out, you can still put, within the canon of the podcast, not legally, ESQ after your name, you become an Esquire, but it's only the callers who get the badges. Yes, Simon, because you're filling in for Matt, you absolutely do get to give yourself a badge once the badges are produced. So, yeah, I just need to say, obviously, consumer rights is everything I'm saying. Let's do the terms and conditions.

4:43Martin Lewis:Anybody calls up who will get a badge. We only came up and the vote only happened for the ESQs last week. The badges are not ready yet. So there will be a substantial delay from the time, if you're on the show today and you're a caller, between actually getting your badges. But hey, think about the anticipation, the wait. It's like the finest food. Your mouth will be salivating with the idea that an ESQ badge is coming to your house one day. You imagine you'll just be, probably could be even a grey day in the middle of winter in 2029. And you're sitting there going, what's going to cheer me up?

5:17Martin Lewis:And then an envelope arrives, you open it and there comes a badge saying ESQ. It's like an idyllic future dream. Shall we get on with some questions? Yes, let's get into them. We've got one in from Ryan. He's asking about Stoozing. He says, hi, Martin and Matt. Thank you for the brilliant work you do to get the community thinking more about money. I like to think of myself as a reasonably financially savvy and have been thinking about stews and strategies and wanted to get your take on something a bit more nuanced. Is it generally more effective to use a 0 % money transfer card to access a lump sum up front and place it into savings to earn interest from day one?

5:59compared to the more traditional approach of using a 0 % purchase card and drip feeding savings by covering everyday spending. On paper, the lump sum approach seems like it should generate more interest due to having a higher balance invested for longer, but once transfer fees are factored in, I'm not sure how often it actually comes out ahead. Is there a clear rule of thumb for when a money transfer strategy beats drip feeding or does it depend entirely on fees, interest rates and the length of the 0 % period?

6:28Martin Lewis:OK, this is a fascinating question. Let's just go through the basic premise of Stoozing, which is for the financially savvy who are debt free. The premise of Stoozing is if a credit card company is willing to lend you money at zero percent over a longish period, you can take the money they lend you, build an artificial debt with it and then take that money and put it into high interest savings. It should always be easy access. You shouldn't be investing this because they can call the debt back at any time. should always be able to pay off the debt. And therefore, you are making money on money they have lent you for nothing.

7:02Martin Lewis:That is the basic stoozing premise. The challenge in stoozing, and I'm fascinated that we seem to get a lot of stoozing questions on this podcast. I think this is becoming the Geeks podcast, which I love. But the challenge on stoozing is how do you get the money onto the credit card? How do you effectively build that 0 % debt? And you're quite right that there are two ways. I'm just going to explain them more in general for people. One way is you get a zero percent for spending credit card that gives you interest-free spending, let's say, for 26 months on anything that you pay for with the card.

7:36Martin Lewis:So what you would do then is you would just then use the card to do all your normal spending, building up a debt on it, making over the minimum repayments. And because you're not using the money in your bank account, money builds up in your bank account and you put that money into high interest savings. That's the first method. The second method, as you're rightly talking about, is to use a money transfer card. They're not that good at the moment. You get 12 months 0 % there and the fee is 3 % or 4 % depending whether it's the Tesco card or the Virgin card, which are the two that offer money transfers.

8:08Martin Lewis:A money transfer is a bit like a balance transfer, but with a money transfer, you get the new 0 % card and it pays money directly into your bank account for you, so you now owe the 0 % card instead. So it's a much quicker way of transferring the money, but you pay the fee. I would generally favour doing the purchases route, because I don't feel you want to be paying a fee at any point in this. But we need to do some numbers. And via the magic of podcasting, I'm going to go and do those numbers now.

8:49Martin Lewis:The numbers have been crunched and the results are in. And let me tell you, it is a very, very easy win for the purchases credit card route. Let's look at the money transfer card. You can get 0 % for 12 months, but there's a 4 % money transfer fee. So if you had a credit limit of£5 ,000, in fact, it'd have to be slightly higher to do this, but if you shifted£5 ,000 of debt into your bank account and save that in the top easy access savings account at 4.5 % and we'll assume you don't pay tax on your savings interest. It would earn you£225 over the year. But the 4 % fee is costing you£200. So there's only a£25 gain.

9:36Martin Lewis:Or we look at the purchases card. So let's imagine you've got a 26-month 0 % purchases card and you're spending£400 a month on it, you could arguably be spending a lot more. I went very conservative. You might be spending£800,£1 ,000 and could do this much more quickly. And we'll assume again, you've got effectively, you're allowed to put up to£5 ,000 on the card. Well,£400 a month over 12 months means by the end of the year, you'd have£4 ,800 on it. The interest, well, of course, in the initial months, you'd only have£400, then£800, then£1 ,200, then£1 ,600 on it. So the interest would not be as high over the first year in a 4.5 % account.

10:19Martin Lewis:The interest would be 117 quid, but there's no cost. So all of that is profit. And then remember, for the second year, you've now got all of your£5 ,000 on the card, which means in the second year, assuming interest rates stay where they are, you get 225 quids worth of interest without doing anything. Do remember you still need to make minimum repayments on it. That's always worth remembering. So just taking some really simple sums there, you're going to be far better using the purchases route where you use that card for spending each month. And if you had the money transfer card after a year at 0%, yes, you could try and get a no-fee balance transfer, but they're not that good at the moment either.

10:59Martin Lewis:So I think actually the way the products have changed recently, it used to be money transfer cards were much better than they were. They've got a lot worse, whereas purchases cards have stayed around the same. it's a very easy route now do it with a purchases card do your normal regular spending build up the debt that way have no fee whatsoever at all put the money in high interest savings and you'll make more money that way and remember for those who listened a few weeks ago we had a couple who've got a 30 000 pound stew's pot so by putting money onto the card and then balance transferring it to new cards they have 30 000 pounds of zero percent debt that they have in a savings account earning them 4 % interest.

11:40Martin Lewis:So that's around£1 ,200 a year interest. And some people even do it and then they use the money in their offset mortgage to reduce what they're paying on the mortgage too. Stoozing can be incredibly lucrative, but it is very risky if you don't know what you're doing. So you need to be debt-free, financially savvy, good at spreadsheets, and then it can be a winner. Otherwise, being a Stoozer can be a loser.

12:05Martin Lewis:OK, so Simon, it's the second question in the show and under Matt's format, that normally means this will be a caller. I know what Matt's like. He's pretty straight. He will have told you, you do a caller second, you do a caller every even. So I'm guessing, because we're all a bit scared of Matt, that you've got a caller. Oh, I do not want to break the system. We have lined up Joe in Lanarkshire. Hello, Joe. Hi, Martin. How are you? I'm very well thank you very much what is your question? So I wanted to ask a wee bit about the high income child benefit charge so just this month I've moved up to the top of my pay scale and because I'm a single parent it's just tipped me over the top of the threshold.

12:44Martin Lewis:So can I just check and let me just explain to everybody listening so the rules on child benefit is if there is a single earner so it could be either parent who earns over£60 ,000 then the total amount of child benefit you get is reduced. If they earn over£80 ,000 the net effect is you don't get child benefit and if you're between 60 and 80 it's a linear sliding scale between the two. So when you say you've tipped over, have you tipped over the 80 or tipped over the 60? The 60. OK. Well in a way good and in a way bad. Carry on. So as an aside to this my car is quite old and my company has introduced a new electric car salary sacrifice scheme so I've been looking into that and it does still look quite a good fit for me so technically if I sort of do that it'll drop me back under the threshold so I'm kind of in the position where I'm probably going to be just above the threshold for maybe the first half of the year and then just below it again the second half so I was wondering do I need to do anything in terms of paying back for you know part of the year that I'm above it or does things sort of average out over the year.

13:53So big picture, things average out over the year.

13:58Martin Lewis:You only lose child benefit if you earn over£60 ,000 in the tax year of adjusted income. I mean, it's also worth noting, is the salary you're talking about before or after pension contributions? After. After. So, OK, so there's money already been taken off. Are you salary sacrificing for those as well? Yes. Okay, that makes sense. Right, so if your total adjusted earnings are below£60 ,000 in a year, you don't have to pay. But you may end up paying and then have to reclaim if you do it via the PAYE system. So I would suggest you don't set this up to pay via the PAYE system. You would do it on your self-assessment form or you'd do it via self-assessment.

14:45Martin Lewis:But you would only have to do it if your total adjusted net income goes above£60 ,200. And so what it seems to me is you're saying it won't. So basically, you don't want to deal with this. I mean, if at the end of the year it does, you're going to have to deal with it. And you can go on to the gov.uk's child benefits tax calculator to have a look at this and exactly what the situation is. But it's sounding to me like you're going to be below the threshold. So you don't need to declare or you don't need to do anything because you will still get full child benefit that would be good and i mean don't get me wrong i don't mind sort of paying back if i'm above the threshold and things then i'm happy to play by the rules but i think my worry is just around about that whole self-assessment side of things it's not something that i've done before and yeah i was just a bit worried about what that would look like so overall while i think obviously doing self-assessment would be a hassle for you it sounds to me like you're not going to need to do it so we're best to just hold off and go for system where you would have to do self-assessment if you were going to earn over£60 ,200 because it looks like you're not going to, which means on that premise the best thing to do is to do nothing.

15:51Martin Lewis:And in fact it gives almost an extra advantage of doing your new car via the salary sacrifice scheme, isn't it? Because it means you don't have to get rid of the child benefit, so it's effectively that's a really efficient way for you to do it. Yes, yes, thank you so much. My pleasure. Jo, you dropped and it gave me a chance to eat a biscuit and I'm hungry, so that was good That's good, I'd be glad I've just now got to choose a biscuit so people can't hear me eating a biscuit if you don't mind You eat your biscuit, no problem Thank you very much, Jo that was brilliant Not only does that mean hopefully you're going to keep your full child benefit and get a car paid through salary sacrifice which if people don't know means the company says we're going to pay for your car for you the payments for you each month by reducing your salary the same amount, which can be quite tax efficient or national insurance efficient to do so.

16:43Martin Lewis:But way more important than any of that. Joe, you're going to get a badge. Are you excited? Has she dropped? We've lost her. Oh, no! Her phone's dropped. Oh, no! Leave that in, Simon. Leave that in. I built it. I did all that. I built it up so well. It can't go to waste. I reckon she would have stayed on the line if it had been NPC. Yeah, no, she's an ESQ. I'm sorry.

17:17Martin Lewis:Are you sitting there thinking, oh, I know what I wanted to ask him? Well, this is your opportunity. If you've got a question, then just send them in to martinlewispodcast at bbc.co.uk and please do start them, Dear Martin. No, Dear Matt. Dear Martin. Dear Matt. Or Simon. Maybe Simon?

17:39Martin Lewis:OK, well, the answer to that one fell flat. Let's hope we can do better. It's just me and you now, Simon. We can't mess this up. You at least cannot drop off the line. What have you got for me? No, no, I'm going to stay to the end of the pod. I'm contractually obliged to. Don't worry about that. Good. Michaela has got in touch. Hi, Martin. My 16-year-old daughter had a kid's savers account with the Halifax. This then changed to an everyday saver, but the interest is poor. She's 17 in June. She has two part-time jobs and wants to put her wages into a savings account with better interest. As she is under 18, can she apply for a regular high-interest account?

18:16She appears to only qualify for the kids' savers.

18:19Martin Lewis:Hello, Michaela, and thank you very much for your question and well done to your daughter on getting the savings habit so young. Now, one of the most important things, exactly as you're asking, is to try and get the best interest rate that can be paid. I'm not sure which of the Halifax savings products she had before. The most lucrative is the Halifax Kids regular saver that's 5.5 % interest. But that's not one where you can put lump sums in. That's where you put in a set amount each month. I think it's up to£100 you can put in each month to get that interest rate. It's fixed for a year. So she may have had that or she may have had the standard Halifax Kids account that pays about 2%.

18:55Martin Lewis:If it's moving to the everyday account, that could pay even less. so generally most adult accounts you have to be aged 18 to get so we're really looking at what are the children's savings accounts that still allow 16 and 17 year olds to put money in now if it was a regular saver so she's putting a regular amount of money each month and that's what she wants well the top payer now is the saffron building society 3.95 percent variable and in a way I don't really think that's worth it because you can get better interest rates in a lump sum account. The best payer is the Nationwide FlexOne Saver for children.

19:36Martin Lewis:You must open the Nationwide FlexOne current account to get it. It pays 5 % interest on up to£5 ,000 in there. She can open it either in a branch or via its app or online and it works up until age 17. Some other options, Kemp Reliance at 4.18 % on up to£25 ,000. So if a Saturday job is paying really, really well, you can get that on a larger amount. And then going down below that, you've got HSBC My Savings at 3.75 % and the Family Building Society at 3.6%. But it's sounding to me like the Nationwide is the best account. And it's, you know, the more that you can educate her about her money at this point, the more she gets into it, the more she understands that putting her money away in a top savings account means she has more money, the better.

20:20Martin Lewis:You never know. She could even try and put£10 a month in an investment account too to see how that grows for her. Thank you so much for your question, that you get to call yourself an ESQ.

20:33Martin Lewis:Right, Simon, so it's the even number questioner in this, so it has to be a caller. Is it a caller you've got for me next? No, we've got a voice note on this occasion. I think you'll really enjoy. Very important precedent has been set that voice notes do qualify for a badge. so what's our voice note caller voice note caller? Are they a voice note caller? A voice note, yeah it'd be correspondent Our ESQ What's our ESQ's name? Well it's Kate in Chorley but I should flag before we play this now I book a lot of guests I ask a lot of people for voice notes this is something I've been doing for a while people sometimes get a bit nervous it's a bit overwhelming the can you just send in a voice note to play to Martin Lewis so I'll often send them a bit of a kind of template of how to start it to get them into it And so with Kate, after I chatted to her on the phone, I sent her an email saying, oh, if you could just start it with something like this, like, hi, Simon and Martin, dot, dot, dot.

21:26Let's see how it goes. Hi, Martin and Simon. Kate from Chorley here. My son's going on his first lad's holiday this summer. He's just turned 18. What's the best card for him to take with him? Or should he just take cash? Not keen on introducing him to the world of credit cards just yet, as I think the temptation to overspend would be there, and he has no financial discipline yet. we've also realised that where he's staying requires a 300 pound credit card deposit and i'm not sure if there's any other way around this any advice you could give would be much

21:56Martin Lewis:appreciated thanks yeah simon i know matt will be very interested it's a it's a martin and simon in there he won't like that and he'll be on his holiday and he'll be having his break and he'll listen to this podcast and he'll be there i can see he'll have daggers in his eyes so let's answer the question. The credit card bit at the end is the difficult bit. What card would I get an 18 year old who you don't want to have a credit card? Well, the obvious one is the Chase card. Now, technically, you have to open a bank account to get it, but you don't need to switch bank account. And the Chase bank account is available for anyone aged 18 or older.

22:29Martin Lewis:It's openable via an app. So effectively, you can open this up, you put money in it that you want to spend, and it gives you the same near perfect rate that the bank gets when you spend, because it doesn't add a non-Sterling exchange rate fee. So I think that's a really simple option and it's a debit card. It doesn't have an overdraft facility. It doesn't do a hard credit check. It just does an ID check and it doesn't affect his credit worth enough. An alternative would be something like a Revolut prepayment card, which equally it could get where you're loading the money up. And I think either of those two would work.

23:03Martin Lewis:Now, your final bit was leaving a credit card deposit. I mean, that is much tougher. But if they want a credit card deposit, and you have this when you're hiring cars abroad, although 18, you won't be able to get a car hire anyway, then they tend to mean a credit card. So the question is, either you're going to need to get him a credit card, which could be quite tough. I mean, it'd be something like the Barclay Card reward card, but it will take a credit check to get a credit card. And an 18 year old may struggle to pass that credit check anyway. Or could you pay the deposit for him? would it be allowed that you could ring them up and make the credit card deposit for him and then that would be totally separate to the amount that he's going to spend it's a very simple suggestion but that seems to be the easiest suggestion i've got but most of all enjoy your lad's holiday such an exciting time in your life well yeah 18 years oh yes just be careful and let's remember when we're talking finances and young people well they're the biggest dangers for finances and young people and simon i could almost hear the glee in your voice when you were saying it and i suspect this was you, is drinking.