Stoozing, derived from the verb stooz, is a slang term used to describe the act of borrowing money at 0% (typically on credit cards), putting the money in a high interest account, and paying it back before the 0% period ends. It is important to note that the borrower does not typically have a real debt to service, but instead uses the money loaned to them to earn interest.

Fierce competition has meant most credit card lenders have introductory periods of up to 15 months during which balances transferred from other cards are charged at 0% interest. The stoozer will borrow money for ‘free’ and then put it into a high-interest account that pays 6% interest or more.

The term “rate tart” is sometimes incorrectly applied to this practice. A rate tart frequently moves an existing debt around in order to get the lowest interest rate, but has a real debt and does not do it to earn money.

Borrowers who rely on new deals to maintain a low-interest debt or profit from ‘doing a stooze’ will be hit hard if rivals follow U.K. internet bank Egg’s lead (part of Citigroup) and axe unwanted credit card customers. The banking giant, who incidentally was the bank that started the 0% credit card phenomenon in the first place. is banning 160,000 debt-ridden customers from using their credit cards and has set alarm bells ringing for those reliant on a steady stream of new borrowing.

Stoozing relies on a steady stream of new deals being made available and acceptance to them. If lenders begin to target unprofitable customers or cut back on offers, the rug will be pulled out from underneath stoozing.

If stoozers have invested cash and not spent it then they should be able to pay it back if they are unable to find new deals, however if they have spent money they could run into serious problems and face high credit card interest on outstanding balances.

It is the first time a credit card company has resorted to such a drastic move to curb over-spending, but others are expected to follow their lead as the global credit crunch tightens its squeeze on the beleaguered banking industry.

If they do follow suit, it could lead to a crisis on the high street, because credit card spending has fuelled the ’spend, not save’ shopping culture.

Egg’s move marks a dramatic turnaround from recent years when firms were dishing out easy credit to almost anyone.

There are signs of other firms clamping down on credit card customers who they fear are spending money they will never repay.

HSBC in the U.K. said yesterday it is now turning away just under half of all customers who apply for a credit card. They used to accept around two in three.

Barclaycard, another U.K. credit card bank said it is blocking some customers’ ability to withdraw cash on their credit card because this is a classic sign of financial distress.

Meanwhile, one in five people in a recent poll said they had seen their credit card limit cut in the past six months.

A spokesman for the trade body Association of Payment Clearing Services said: ‘A definite mood has been sweeping the industry.

Andrew Hagger, from the financial information firm Moneyfacts, said: ‘There is a growing number of people relying on credit to manage their day-to-day living. Losing that line of credit will undoubtedly bring matters to a head for many people earlier than expected.’