July 7th 2023.
What is Business Credit Card Stacking?
Credit card stacking is an alternative to traditional small business funding. It involves opening multiple credit card accounts in a specific order to establish an unsecured business line of credit. Credit card companies are often more flexible than traditional small business lenders, so small business owners can use a stacking strategy to gain the necessary funding quickly.
The best business credit cards include special perks and bonuses, such as 0% introductory APRs, cash-back rewards, or discounts at specific business-to-business vendors and supplies. Not only can stacking help establish and build business credit for more advantageous financing solutions in the future, but it can also provide an urgent funding need for businesses.
How does Credit Card Stacking work?
When considering a credit card stacking strategy, you can research and apply for the available options on your own or apply to a stacking company. To start the process, you must determine what you qualify for. While credit card companies are flexible on revenue and time in business requirements, you’ll still need good credit in most cases. The best business credit card options usually require a minimum personal credit score of 680+.
Once you have determined what you qualify for, you should shop lenders and cards. Part of the process requires researching the best card options and lenders. When deciding on a card, you should compare costs, rewards, and other factors. Working with a stacking company can help with researching your available options.
When you work with a stacking company, it takes care of submitting the applications for you. If working on your own, you must individually complete the applications. You’ll usually apply for multiple credit cards simultaneously, typically 5-15. You’ll typically get a response on your application quickly.
Once approved, you can usually receive the card in 3-10 business days. When using the credit cards for business expenses, it’s best to spread the credit card debt across accounts so your utilization isn’t too high on any one card.
Fees, APRs, and Accrued Interest
Credit cards use an APR, with most ranging from 15% to as high as 35%. Some cards also include fees, such as annual fees or cash advance fees. If you use a stacking company, it will typically charge a fee between 9-12% of your credit limit. You accrue interest on a monthly billing cycle. Paying your balance in full prevents interest charges. The minimum monthly payment is typically 1-2% of your total balance.
Rewards, Perks, and Bonuses
One of the advantages of commercial credit cards is that many offer a rewards program to attract and retain customers. As mentioned, several business credit cards offer an introductory 0% APR, although fees still apply. The introductory period is usually between 6-22 months, but some go up to 24 months. You should also look for cards that offer cash-back rewards. Other bonuses might include discounts for using the card with specific vendors or free balance transfers.
Who should use Credit Card Stacking?
Credit card stacking isn’t a viable funding strategy for every small business, but it sometimes makes sense. Businesses that can’t qualify for a loan, have an urgent funding need, have no collateral, or are startups can benefit from stacking.
What are the benefits of Credit Stacking?
Credit cards are unsecured. You can usually take advantage of introductory APRs and various rewards and bonuses. At the same time, carrying available credit and paying off your cards can help establish and grow business credit. Most credit cards provide fast approval and funding times, and it can help quickly provide a line of credit. Having multiple credit cards for business expenses also helps with budgeting and debt management.
What are the drawbacks of Credit Card Stacking?
In most cases, you’ll still need good credit, usually 680 or better. While introductory APRs can save money, the standard APRs are typically much higher than business loan interest rates. Stacking credit cards means keeping track of different balances, due dates, and rewards programs. Monitoring the credit activity can be time-consuming and difficult. Most cards require a personal guarantee, which is a promise to repay the debt even if the business fails.
How can my business effectively use Credit Card Stacking?
Credit card stacking can be an effective business funding strategy but requires planning and discipline. Running up balances too high can lead to payments your cash flow can’t afford. Being overleveraged can put your business at risk.
Creating a budget and tracking your expenses is essential. You should also plan to pay your balance on time and set up automatic payments. Keeping a spreadsheet of all expenses in one place will help you track them on time. Paying off the entire balance each month to avoid interest charges is ideal, but at the very least, you should make your minimum monthly payment to avoid significant charges and a negative credit report.
What is Business Credit Card Stacking?
Business credit card stacking is an alternative to traditional small business funding. It involves opening multiple credit card accounts in a specific order in order to establish an unsecured business line of credit. Credit card companies are often more flexible than traditional lenders like banks and credit unions, making it easier for small business owners to gain the necessary funding quickly.
The best business credit cards include special perks and bonuses, such as 0% introductory APRs, cash-back rewards, and discounts from specific business-to-business vendors and supplies. Using a stacking strategy can also help establish and build business credit for more advantageous financing solutions in the future.
However, like all financing products, credit card stacking carries risks. Credit card APRs can get very expensive, and falling behind on payments will damage your credit.
How does Credit Card Stacking work?
When considering a credit card stacking strategy, you can research and apply for the available options on your own or apply to a stacking company. To get started, you'll need to determine what you qualify for. While credit card companies are flexible on revenue and time in business requirements, you’ll still need good credit in most cases. The best business credit card options usually require a minimum personal credit score of 680+.
Next, you should shop lenders and cards. Part of the process requires researching the best card options and lenders. When deciding on a card, you should compare costs, rewards, and other factors. Once you've done your research, you can apply for multiple credit cards simultaneously.
You’ll typically get a response on your application quickly and can usually receive the card in 3-10 business days. Each card comes with a set credit limit. Businesses that require stacking typically can’t get approved for a high-balance credit card or line of credit.
Fees, APRs, and accrued interest are also important factors. Credit cards use an APR, with most ranging from 15% to as high as 35%. Some cards also include fees, such as annual fees or cash advance fees. The minimum monthly payment is typically 1-2% of your total balance.
You should also look for cards that offer rewards, perks, and bonuses. Many offer a rewards program to attract and retain customers. Cash-back rewards can help offset some of the costs of the cards, and other bonuses might include discounts for using the card with specific vendors or free balance transfers.
Who should use Credit Card Stacking?
Credit card stacking isn’t a viable funding strategy for every small business, but it can make sense in certain scenarios. Businesses that can’t qualify for a traditional loan, have an urgent funding need, or have no collateral might consider stacking credit cards as an alternative solution. Startups may also find it easier to use stacking to gain access to funds.
What are the benefits of Credit Card Stacking?
Credit cards are unsecured, and you can usually take advantage of introductory APRs and various rewards and bonuses. At the same time, carrying available credit and paying off your cards can help establish and grow business credit.
Most credit cards provide fast approval and funding times, and having multiple credit cards for business expenses can help with budgeting and debt management.
What are the drawbacks of Credit Card Stacking?
In most cases, you’ll still need good credit, usually 680 or better. While introductory APRs can save money, the standard APRs are typically much higher than business loan interest rates. Stacking credit cards means keeping track of different balances, due dates, and rewards programs. Monitoring the credit activity can be time-consuming and difficult. Most cards require a personal guarantee, which is a promise to repay the debt even if the business fails.
How can my business effectively use Credit Card Stacking?
Credit card stacking can be an effective business funding strategy but requires planning and discipline. Running up balances too high can lead to payments your cash flow can’t afford. To ensure you use business stacking responsibly, create a budget and track expenses, pay your balance on time, and take advantage of rewards programs.
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