Recently, I paid off the final installment on a Discover® credit card I’ve held since 2004. Thus, effectively ending my stoozing career. For now.¹
In stoozing lore, the first naming of our guild occurred in a Motley Fool 2004 discussion forum. Then, someone nicknamed Stooze manifestoed on what we were: financial entrepreneurs and outliers who played — and beat — the corporate credit card leviathans at their own game.
Soon after, a Motley Fooler referred to doing a Stooz and the technique became known as stoozing
Since 2004 the term became codified, decently explained by Wikipedia as:
Stoozing is 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.
In 2004, with the help of Discover®, I hit the stoozing bonanza. In the 1880’s, George Hearst must have felt the same way when his Anaconda mine in Montana hit the copper motherload.
Discover® offered me credit cards with zero % interest for the life of the loan and a zero % charge for cash advances. Immediately, I accepted three cards with a line of $60,000 credit. Within minutes, I transferred the money — without charge — into my bank account, some shortly transferred into high interest CDs and some remaining to pay the monthly minimum balance. Free money — as Hearst must have thought when surveying the Comstock Load.
The only “catch” was that to keep the 0% rate you needed to make two purchases a month whose rate of interest was something like 25 %. Seeing through the ruse, every month I went to a gas station and twice put as little gas into my tank as possible. I once stopped the pump at a 3 cent purchase, not quite quick enough for a 1 cent purchase. Zeno’s paradox aside, there’s no way to purchase less than a penny’s worth of gas.
Knowing the proprietor paid a fee for each transaction, I always filled my tank using another credit card. Eventually, Discover® dropped the monthly two purchase requirement. I paid about 50 cents of interest charges on those gasoline purchases.
The thousand of dollars I made — free copper — was sweet. But equally gratifying was using Discover®’s fine print against itself. A 2007 MoneyWeek article, “How ‘stoozing’ could bring down the global economy”, points out that “banks and hedge funds around the world have basically been stoozing on a global scale.” Turnabout is fair play. One stoozer remarked in the Nov 5th, 2005 Guardian:
Revenge is sweet. And little’s sweeter than hitting back at credit card companies.
We were sweet digital Robin Hoods.
On March 30th 2009, then Rochester Institute of Technology’s Finance Professor Robert Manning — author of Credit Card Nation, an expose of credit card abuse — appeared on WXXI’s 1370 Connection hosted by Bob Smith. Manning — one of whose specialties is the effect of credit card debt on college students — discussed the social consequences of what he called “America’s addiction to credit.”
I called the show. As I was also teaching at RIT at the time, I praised Manning’s work on credit cards and college students. Then, somewhat sheepishly, I added that, while I didn’t want to encourage credit card debt, if used judiciously, consumers could actually win.
To my surprise, Manning chirped in, Yes, for sure! He then told a story about buying a condominium through shrewdly exploiting credit card terms and interest rates. If a credit card muckraker was a stoozer, that was good enough for me.
One of my previous adventures in the credit card fun house was — depending on your perspective — less praiseworthy. In 1987 – 88, I taught Reading and also Life Skills at Johnson & Wales University in Providence, Rhode Island.
J & W was renowned as a culinary school but had morphed into a predominantly and decidedly third-tier business school. I had to leave when a national accreditation board determined that J & W faculty must possess more than a B.A. which was all I possessed.
J & W did not pay well, but the business atmosphere sparked my entrepreneurial ambitions.
I learned that the College Credit Card Corporation paid people to offer credit cards applications to students, usually in the student union, cafeterias or mailroom areas. (I can hear Manning shutter.) CCCC did not actually authorize the cards but merely distributed, and helped students complete, applications for which student were not obliged to accept.
I signed up, receiving easels, posters, stacks of applications and scads of M&M®’s. I quickly learned the M&M®’s — bribes to entice my clientele — were the key to success.
Soon, on free days, I was cajoling, encouraging and hawking all over southern New England. Wentworth, BC, BU, Northeastern, Wheaton, Worchester State and Bridgewater State in Massachusetts; PC, Bryant, RISD, URI, Salve Regina, CCRI, and Roger Williams in Rhode Island; Eastern Connecticut State University in Connecticut. At the time I actually didn’t have a car so instead bussed, trained and walked long distances to mine those APPS (applications). To avoid conflict of interest, I skipped J & W. My other school, Brown University, was too snooty to allow peddlers in its mailroom.
Lugging my equipment as would a foot soldier, I felt like a mercenary fighting in the name of consumerist materialism.
In “Maxed Out College Students: A Call To Limit Credit Card Soliciations On College Campuses” (NYU Journal of Legislation and Public Policy, August 2006), Creola Johnson describes the “carnival atmosphere” encouraged by CCCC.
Johnson vividly captures the Wild West free-for-all in the student unions, mailrooms and cafeterias as we mined for APPS. My favorite school was Wheaton College, then a women’s college.
As I stacked my APPS and attached posters to my easels, young women flocked to the table. At first, I thought my free M&M®’s had unusual talismanic magic. Later, a balding middle aged maintenance man explained that anytime a male — especially a new male — enters the student union, he’s surrounded. The maintenance man said it still happens to him every Fall.
Years later, I can’t quite remember if I felt CCCC was predatory, exploitive and/or bad. After all, transactions between hawkers and their clientele were entirely legal and voluntary. I was making way too much cash to entertain too many airy or presumptive ethical distinctions.
In the last 10 – 15 years, new regulations prohibit offering gifts for APPS, as well as other limitations on how students can be solicited. No doubt the regulations are sound but must diminish the thrill of both giving and receiving APPS.
My tenure at CCCC ended when I took a boring desk job in Brown University’s Office of Development. Cloistered in my cubicle, I pined for those APP gold rush days, prospecting on the fertile plains of southern New England.
My other adventure in the fun house was with Credit Card Protection Insurance, a type of coverage that protects credit card purchases in the event of death, medical disability or unemployment. When a graduate teaching assistant at the University of Rhode Island in the mid-to-late 90s, one year my credit card offered me the insurance. After researching, I learned that in most cases the insurance was a bad deal. But in my case, it wasn’t.
The insurance stipulated that if I became unemployed, I could not make new purchases, but no more interest would be charged and my minimum monthly payment would be paid for by the insurance. Every May, graduate teaching assistants become unemployed with uncertain expectations for summer course.
Knowing this, in the Spring semester I purchased the insurance. Normally, I pay the full balance every month, but now with the insurance I didn’t pay the full amount and let the balance grow. And, indeed come May, I was laid off. Unfortunately, no summer classes were available making me eligible for unemployment benefits.
Every month that summer I submitted proof to my credit card bank of my unemployment and every month the minimum was paid and no interest accrued. But there was more.
Although I didn’t realize it when I bought the insurance, the same policy of minimum balance paid and interest frozen held if I enrolled in school after my unemployment ended — and, of course, I was enrolling in the Fall. Every month I had the Registrar verify that I was enrolled and submitted the documentation to my bank which kept up its side of the bargain. But there was more.
One day, I received a letter notifying me the company was closing my account and including a check for the entire remaining balance. They wanted to wash hands of me who had — entirely properly — taken advantage of the offer they made.
¹Earlier this year, I reactivated my Discover® credit card as they offered 0% APR for 12 month. I promptly made thousands of dollars worth of home improvements. While interest rates are low, I am getting free interest about 10K all told. I also took advantage of its 5% cashback on selected purchases like groceries. So far, I’ve accrued about $15o.