This process is similar to stoozing, but with a small exception. Rather than take out one or two cards with a 0% balance and then transfer the funds to a high yield savings account, people actually submit a bunch of applications within several hours of each other. I have a client at work that has done this and he said he did up to 10 at one time.

Obviously, there are some drawbacks. First and foremost is the damage this can do to your credit. When you first submit these applications, it won’t affect you. By submitting within hours of each other, the other credit card companies have not had time to “report” that they’ve pulled your credit. So, that part doesn’t affect you. If you’ve got good credit, then it’s a good chance you’ll get approved for the cards that you apply for. But, the problem with your credit score comes in when all of those cards report that they’ve given you card – and you’ve “maxed” them out.

Second, you’re playing a bit of Russian roulette with the lenders. Once everyone reports you to the credit bureau, they will be able to see the number of cards you opened within the same time frame. There’s no guarantee that they won’t consider you a higher risk now and reduce your limits, take away your promo rate, freeze the card, or anything else they want to do. Until the laws are changed, they’ll be able to do that. If they reduce your limits and you’re maxed, that’s going to charge a fee and then they’re going to take away the promo rate. It defeats the purpose of stoozing if you have to pay interest on the card.

I’m still trying to work out how my client managed to get 10 credit cards like that. I mean, he’s got great credit, but his DTI was on the high side beforehand because of an excessive mortgage – that’s why he was doing this, to help pay the mortgage payments. But, I’m curious to know why the credit card companies didn’t reduce limits or freeze the card when they did their usual check-ups of his credit report. It’s plain as day to see that he got all of those credit cards at the same time, and he wasn’t lying – I was looking over his credit report with him.

Banks aren’t stupid. OK, well maybe some are. But overall, they’re not. So they’re fully aware that there’s a bit of a loop hole in the system. And given everything else that’s going on, they’re looking for ways to make this harder. They’re cutting the promo times from 12 months or more to six months. They’re increasing and/or (depending on the credit card company) eliminating the minimum transfer fee. Most credit cards were at 3% not to exceed $50 or $75. However, many are getting rid of these caps. It’s a big strain on their business to lose out on the interest for 12 or 18 months on top of all of the other restrictions that are going to be placed on them. Their bottom lines will suffer and they’re preparing for it.

Aside from all of that, the idea is a great way to make a little bit more money. It’s not a get-rich-quick scheme, but there are those out there making $1500 or more a year. It all depends on the rate you can get with the savings account, how many cards you get opened, and how much you take out. Personally, this method is not for me. I’ve gone up to two cards max on my stoozing adventures, and I think I’ll stick with that. I’m not interested in losing ground on my credit score just to gain a few more dollars of interest. I highly recommend that if you’re going to do this, you do so in a responsible manner and pay very close attention to your accounts. Remember, the banks currently don’t have to give much in the way of warning when they jack interest rates for no reason at all.

Has anyone participated in these app-o-rama’s? How much did your score drop when all was said and done and how much did you gain in interest? Was it worth it?

Related posts:

1. I’m a Stoozer…Are You?
2. Why You Should Think Twice Before You Cancel a Credit Card
3. 5 More Credit Card Myths to Watch Out For!
4. How To Cancel a Credit Card Without Hurting Your Credit Score
5. Credit and Debit Card Blocks at the Pump