MBNA Cracks Down On Credit Card Balance Transfer "Stoozing"

Yup, that's right: here's yet another term used in Europe and elsewhere to describe people who take advantage of 0% balance transfer offers: Balance Transfer "stoozers". What is stoozing? Here's how it works: The stoozer applies for a credit card with the best possible 0% introductory Annual Percentage Rate (intro APR) balance transfer offer, e.g. 0% intro APR on balances transferred and cash advances for 12 months. The stoozer then borrows the maximum amount of cash from the new credit card account at 0% APR (e.g. $3,000 via a 0% balance transfer convenience check.) This cash is then transferred to an interest-bearing savings account, mortgage account, Certificate of Deposit (CD), or some other short term financial instrument that can earn money for the stoozer. The stoozing process ends when the 0% introductory APR period on the credit card terminates, at which point the stoozer returns the $3,000 back to the credit card account.

The practice of stoozing seems to be quite common in the UK, and now MBNA is cracking down on the balance transfer stoozer by implementing a policy change, charging both a 2% fee and interest on any money borrowed stoozer-style. In other words, MBNA (in the UK anyway) will no longer treat the borrowing of cash in this manner as a balance transfer, but instead as a typical credit card cash advance.

Using MBNA for stoozing may no longer be an option for UK's balance transfer stoozers, but other banks/credit card companies like Egg, Virgin Money and Abbey still permit the practice.

I have just one more thing to ad here. UK balance transfer stoozers: keep on stoozin'!

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Business Owners Should Be Aware of Balance Transfer Scam

If you are a business owner, you need to know about a scam that uses a hard-to-resist balance transfer offer to get a hold of your business bank account number and siphon funds from your account. Details below:

The scammer calls a business on the phone and tries to obtain the business's checking account number. Sometimes, the scammer will pose as a "New Accounts Executive" for a phony bank credit card company and offer an unbelievable interest rate and repayment terms for any balance transfer from another credit card. And, being exceptionally helpful, the scammer just wants one minute of your time to verify some basic information over the phone to complete the "pre-approved" credit application.

Of course, one of the pieces of "basic information" that's needed is the business’s checking account number.

The object of this phone scam is to obtain your business's checking account number so the scammer can start writing "demand drafts" payable against your checking account. But no one but you can write a check against your own checking account, right? Wrong! Unfortunately, demand drafts don't require a signature, and when your bank receives the draft with a "valid" checking account number on it, it must honor the draft. You only discover the scam if you closely examine your monthly bank statement.

But that's not all! To avoid getting caught, most of the phony demand drafts are written for very small amounts of money, making it less likely that anyone will notice the monthly amount being withdrawn from the account. While being "nicked" for, say, $4.23 a month may not seem like a lot of money to some, $4.23 times hundreds or even thousands of business bank accounts can provide a very lucrative and illegal income to the scammer.

What to Do: Although it may take some time, be sure that you or your bookkeeper thoroughly review and reconcile each of your company's bank statements each month. If you find any unverifiable debits that can't be reconciled, immediately call and then notify your bank in writing of the suspicious charge

The above quoted text is part of a longer MSNBC story that you can read by clicking here.

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