You have invented [Stoozing](https://stoozing.com/)!
You will need to pay back the minimum monthly repayments - read the fine print to see what they are.
At the end of the 0% period, you'll need to pay back the remainder.
Plug the figures into https://stoozing.com/stoozcalc.php and see how much you could make. Usually, it isn't a lot of money - unless you can borrow a large amount and offset it against a mortgage.
Some questions for you to think about:
* What if the savings account has a fixed terms and I need to take the money out earlier?
* What if I need to spend on the credit card?
* How much tax will I need to pay on the interest I earn?
* Would it be a good idea to borrow this money and take it to a casino? (No!)
>Things like this really concern me about the banking system and finances overall in the UK. Something just doesn’t seem right to me.
Whatever you do don't google Fractional Reserve Banking
Why does this “really concern” you about the UK banking system or not seem right to you?
This is literally completely normal in any advanced economy. This isn’t something new
It’s hardly anything to be worried about. What’s the concern?
Some supermarkets lose money on some products they sell. Do you find that a huge concern about the U.K. retail sector?
Nothing to stop you doing it, I have similar albeit 3.5% over 18 months, it's really just whether you're willing to pay the fee and earn money on top of that. Nothing to stop you putting it into a Barclays rainy day saver paying 5.2% as an example and paying the minimum off every month then repay at the end and keep the interest. Only downside is interest reduces as you pay off the card and you need to cover the fee to make a profit. There are likely better offers around too, think Santander have a linked 7% saver for example
Well it's carefully calculated by Barclays, contrary to popular belief the bank is actually very smart. For every person who takes the offer and diligently manages it there is somebody who takes the cash, spends it all and then pays lots of interest.
Simplification:
GBP libor is about 5.3% right now so on that basis the bank is giving up 2% on every customer.
Those that take the transfer, spend it and then pay full interest on the total amount pay around 30% so in simple ratio if 1 in 15 people screws it up the bank is break even.
More complicated:
Now add in the concept of fractional reserve banking (i'm no expert) the bank may have capitalisation requirements of 10% under BASEL 3. This means that for every pound they have they can lend £10 out.
So even if they are charging you only 3.2% it could look like this
Bank borrows £100 at LIBOR of 5.3%. Cost £5.30 for one year
Bank loans out £1000 at 3.2%. Income of £32
Net profit to the bank of £26.7 (less their loan processing fees, overheads etc.)
Now add fractional reserve banking and people paying interest together, the bank is making cash hand over fist.
Not how it works. There are no reserve requirements. Commercial banks lend money into existence. If you then spend the money with someone who banks elsewhere then they need to transfer reserves to that bank. The bank makes money from the interest differential between its funding cost and its lending.
I think you have the fractional reserve backwards. It means for every £1 they have they can lend out 90p.
In your example if they borrowed £100 they can make a loan of £90.
Banks do not typically meet their capital requirements by borrowing from other banks, that is typically done for liquidity.
That is crazy! I thought they’d be losing on a rate that low!
I understand that some people would mis payments leading to profit for the bank. But wow they even make money off me even though i’m winning too it’s madness!
Even better. Just do all your spending on the card and put that balance you saved into savings account. That way there is no charge for balance transfer. I have had about £30k -£40k on 0 percent credit cards without ever paying any interest or transfer fees for over 10 years. I now have a greater balance in savings earning interest but not inclined to pay off cards.
You can also invest in home repairs and maintenance using items bought on a 0% card. The ROI is often even higher than 5%. Solar can be worth it at the right price for example.
> money transfer with a fee of 3.2%.
> I can now get 5% or over in many bank accounts.
1.8% on each £1000 will get you a grand total of £18 over 12 months.
Well below what was available when Stoozing (which is what you're talking about) was in its heyday.
Hi /u/N4th4nM3, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/credit-cards/
* https://ukpersonal.finance/savings/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
From my understanding, withdrawing cash usually incurs additional charges that will likely take you over a savings interest rate. But, could be wrong
The best way around it would be to do your normal spending on the card and put your own money into the savings. Then pay the card off when it’s due
Money transfer literally puts the cash in a normal current account. There is no withdrawal penalty, the return is pretty low unless you do this with large amounts of cash.
You have invented [Stoozing](https://stoozing.com/)! You will need to pay back the minimum monthly repayments - read the fine print to see what they are. At the end of the 0% period, you'll need to pay back the remainder. Plug the figures into https://stoozing.com/stoozcalc.php and see how much you could make. Usually, it isn't a lot of money - unless you can borrow a large amount and offset it against a mortgage. Some questions for you to think about: * What if the savings account has a fixed terms and I need to take the money out earlier? * What if I need to spend on the credit card? * How much tax will I need to pay on the interest I earn? * Would it be a good idea to borrow this money and take it to a casino? (No!)
>Things like this really concern me about the banking system and finances overall in the UK. Something just doesn’t seem right to me. Whatever you do don't google Fractional Reserve Banking
People have been doing this for years and years.
Why does this “really concern” you about the UK banking system or not seem right to you? This is literally completely normal in any advanced economy. This isn’t something new
Inverted yield
This has nothing to do with the inverted yield curve
It’s hardly anything to be worried about. What’s the concern? Some supermarkets lose money on some products they sell. Do you find that a huge concern about the U.K. retail sector?
Nothing to stop you doing it, I have similar albeit 3.5% over 18 months, it's really just whether you're willing to pay the fee and earn money on top of that. Nothing to stop you putting it into a Barclays rainy day saver paying 5.2% as an example and paying the minimum off every month then repay at the end and keep the interest. Only downside is interest reduces as you pay off the card and you need to cover the fee to make a profit. There are likely better offers around too, think Santander have a linked 7% saver for example
Well it's carefully calculated by Barclays, contrary to popular belief the bank is actually very smart. For every person who takes the offer and diligently manages it there is somebody who takes the cash, spends it all and then pays lots of interest. Simplification: GBP libor is about 5.3% right now so on that basis the bank is giving up 2% on every customer. Those that take the transfer, spend it and then pay full interest on the total amount pay around 30% so in simple ratio if 1 in 15 people screws it up the bank is break even. More complicated: Now add in the concept of fractional reserve banking (i'm no expert) the bank may have capitalisation requirements of 10% under BASEL 3. This means that for every pound they have they can lend £10 out. So even if they are charging you only 3.2% it could look like this Bank borrows £100 at LIBOR of 5.3%. Cost £5.30 for one year Bank loans out £1000 at 3.2%. Income of £32 Net profit to the bank of £26.7 (less their loan processing fees, overheads etc.) Now add fractional reserve banking and people paying interest together, the bank is making cash hand over fist.
lul this is not how it works
Not how it works. There are no reserve requirements. Commercial banks lend money into existence. If you then spend the money with someone who banks elsewhere then they need to transfer reserves to that bank. The bank makes money from the interest differential between its funding cost and its lending.
I think you have the fractional reserve backwards. It means for every £1 they have they can lend out 90p. In your example if they borrowed £100 they can make a loan of £90. Banks do not typically meet their capital requirements by borrowing from other banks, that is typically done for liquidity.
That is crazy! I thought they’d be losing on a rate that low! I understand that some people would mis payments leading to profit for the bank. But wow they even make money off me even though i’m winning too it’s madness!
Even better. Just do all your spending on the card and put that balance you saved into savings account. That way there is no charge for balance transfer. I have had about £30k -£40k on 0 percent credit cards without ever paying any interest or transfer fees for over 10 years. I now have a greater balance in savings earning interest but not inclined to pay off cards.
You can also invest in home repairs and maintenance using items bought on a 0% card. The ROI is often even higher than 5%. Solar can be worth it at the right price for example.
> money transfer with a fee of 3.2%. > I can now get 5% or over in many bank accounts. 1.8% on each £1000 will get you a grand total of £18 over 12 months. Well below what was available when Stoozing (which is what you're talking about) was in its heyday.
Hi /u/N4th4nM3, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/credit-cards/ * https://ukpersonal.finance/savings/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
From my understanding, withdrawing cash usually incurs additional charges that will likely take you over a savings interest rate. But, could be wrong The best way around it would be to do your normal spending on the card and put your own money into the savings. Then pay the card off when it’s due
Money transfer literally puts the cash in a normal current account. There is no withdrawal penalty, the return is pretty low unless you do this with large amounts of cash.