If you've got spare cash — or access to 0% credit — you've probably wondered where it's best deployed. Should you stooze with a 0% credit card? Buy Premium Bonds and hope for the monthly draw? Or just stick it in the best savings account you can find?
Each strategy has different risk profiles, tax implications, and expected returns. Here's how they actually compare in 2026.
The Three Strategies at a Glance
| Factor | Stoozing | Premium Bonds | Savings Account |
|---|---|---|---|
| Expected return | 4-5% AER | ~4.4% prize fund rate | 4-5% AER |
| Risk | Low (if disciplined) | None (capital guaranteed) | None (FSCS protected) |
| Tax | Interest taxed via PSA | Tax-free | Interest taxed via PSA |
| Liquidity | Restricted by 0% period | Withdraw anytime | Usually instant access |
| Capital needed | None (borrowed) | Your own money | Your own money |
| Effort | Medium-high | Very low | Very low |
How Stoozing Works
Stoozing means borrowing on a 0% purchase or balance transfer credit card, then depositing the money into a savings account to earn interest. You repay the card before the 0% period ends, keeping the interest.
Example with £5,000 stooze:
- Borrow £5,000 at 0% for 18 months
- Deposit into a 4.5% easy access savings account
- Interest earned: approximately £340 over 18 months
- Balance transfer fee (if applicable): £150 (3%)
- Net profit: ~£190
The key advantage of stoozing is that you're earning interest on money you don't have. Your own savings can be doing something else entirely. Read our full stoozing guide for the step-by-step process.
When Stoozing Wins
- You don't have savings to deploy (stoozing uses borrowed money)
- You can get a 0% purchase card with no fees
- You're disciplined enough to track repayment dates
- You want to stack returns on top of other strategies
When Stoozing Loses
- The balance transfer fee eats into your returns
- You forget to repay and get hit with 20%+ interest
- You're applying for a mortgage soon (the credit on your report matters)
- The mental overhead isn't worth it for small amounts
How Premium Bonds Work
NS&I Premium Bonds are government-backed bonds where instead of earning interest, your money is entered into a monthly prize draw. The current prize fund rate is 4.4%, meaning the average return across all bondholders is 4.4% — but your individual return will vary.
Example with £5,000 in Premium Bonds:
- Prize fund rate: 4.4%
- Expected annual return: ~£220
- But this is an average — you might earn £0 or £500+
- Minimum holding: £25, maximum: £50,000
- Tax-free (no income tax or capital gains)
When Premium Bonds Win
- You're a higher-rate or additional-rate taxpayer (returns are tax-free)
- You've exhausted your Personal Savings Allowance
- You like the lottery element — chance of winning £1 million
- You want zero risk (NS&I is backed by HM Treasury)
- You want simplicity (buy and forget)
When Premium Bonds Lose
- You're a basic-rate taxpayer with PSA headroom (savings accounts will reliably pay more)
- You need predictable returns (Premium Bonds are lumpy — you might get nothing for months)
- Small holdings (the odds of winning anything meaningful with £1,000 are poor)
- You need instant access (withdrawals take 1-3 working days)
How Savings Accounts Work
The simplest option: deposit your money and earn a fixed or variable interest rate.
Example with £5,000 in a 4.75% easy access account:
- Annual interest: £237.50
- Guaranteed and predictable
- FSCS protected up to £85,000
- Instant access to your money
When Savings Accounts Win
- Predictable, reliable returns
- Basic-rate taxpayer with PSA headroom (first £1,000 of interest is tax-free)
- You want instant access
- Best rates often beat Premium Bond expected returns
- No effort required
When Savings Accounts Lose
- Higher-rate taxpayers: PSA drops to £500, so large balances create a tax bill
- Additional-rate taxpayers: no PSA at all
- Rates can drop at any time (unless you fix)
- You need to actively hunt for the best rates
The Tax Factor
This is where the comparison gets interesting, because your tax band completely changes which strategy wins.
Basic-Rate Taxpayer (£12,571 – £50,270)
Personal Savings Allowance: £1,000
You can earn £1,000 of savings interest tax-free. For most people stoozing moderate amounts, this means savings account interest is effectively tax-free.
- Best choice: Savings accounts (reliable, tax-free up to PSA)
- Second choice: Stoozing (earn interest on borrowed money)
- Third choice: Premium Bonds (tax-free but unpredictable)
Higher-Rate Taxpayer (£50,271 – £125,140)
Personal Savings Allowance: £500
Your PSA is halved. With £12,000+ in savings, you'll exceed it and pay 40% tax on the excess interest.
- Best choice: Premium Bonds (tax-free, no PSA limit)
- Second choice: Stoozing into Premium Bonds (borrowed money earning tax-free returns)
- Third choice: Savings accounts (40% tax on interest above £500)
Additional-Rate Taxpayer (£125,141+)
Personal Savings Allowance: £0
Every penny of savings interest is taxed at 45%.
- Best choice: Premium Bonds (tax-free is massive at this band)
- Effective comparison: A 4.75% savings account nets you ~2.6% after 45% tax. Premium Bonds at 4.4% expected return are worth far more.
The Real Power Move: Combine All Three
The smart play isn't choosing one — it's layering them:
- Stooze on 0% cards (earning interest on borrowed money)
- Fill your PSA with high-interest savings accounts
- Overflow into Premium Bonds once your PSA is exhausted
- Add regular savers for boosted rates on monthly deposits
Example combined strategy for a higher-rate taxpayer:
| Strategy | Amount | Annual Return |
|---|---|---|
| Stoozing (£5k at 4.5%) | £5,000 | £225 |
| Savings (up to PSA limit) | £11,000 | £522 |
| Premium Bonds (overflow) | £20,000 | ~£880 tax-free |
| Regular savers (2 × £250/mo) | £6,000 | ~£195 |
| Total | £42,000 | ~£1,822 |
This is exactly the kind of strategy StoozeMax helps you track. Try the What-If Planner to model your own scenario.
Bottom Line
There's no single "best" option — it depends on your tax band, how much capital you have, and how much effort you want to put in.
- Got no spare cash but good credit? Stooze.
- Basic-rate taxpayer with savings? High-interest savings account.
- Higher-rate taxpayer? Premium Bonds for the tax-free advantage.
- Want maximum returns? Combine all three.
Whatever you choose, the worst option is leaving money in a current account paying 0%. Even small moves — a regular saver here, a switch bonus there — add up to hundreds per year.
Track all your strategies in one place with StoozeMax — it's free.
Related reading: Stoozing Guide: How to Earn Interest from Spending | £1,000/Year from Banking: Month-by-Month Plan