Credit card stacking is the strategy of applying for multiple credit cards in a specific order to access a larger unsecured line of credit than individual small business credit cards can offer. Here we’ll explain how it works, the costs and benefits, and when it might be a good option for small business owners.

How Credit Card Stacking Works

If a company advertises that they can get your small business an unsecured line of credit of up to $150,000 with low interest rates, it’s likely they are a credit card stacking company. 

Just think about it for a moment: If you were a lender, would you loan a startup that kind of business financing without collateral? We looked into how credit card stacking companies get you an unsecured line of credit for such a large sum. 

Here is how it works:

1. The stacking company reviews your personal credit scores, income and other relevant qualifications to identify cards for which you are likely to qualify. Your personal credit scores typically need to be at least 680 or above to get qualify for most credit cards, and it’s worth noting that approval is not guaranteed.
2. Credit card stackers will provide guidance or assistance as you apply for multiple credit cards; often 5 to 15 or more. 
3. They will often target business credit cards over personal credit cards because most business credit cards don’t show up on your personal credit reports as long as you make the payments on time. This can protect your personal credit scores from high utilization (a high balance compared to the credit limit.) 
4. For financing purposes, they may also focus on cards with the lowest APR including 0% intro APR credit cards for the first six to 18 months.
5. Once you are approved and the credit cards are issued, you can use them as the business line of credit. If you need to get cash out of the credit line, they will also teach you how to do that without incurring a cash advance fees.

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Benefits of Credit Card Stacking

The stacker’s pitch is that it’s hard for entrepreneurs to find and secure the best credit cards, but they are experts in business and personal credit cards. 

Minimize personal credit impact

By strategically submitting applications, credit card stacking firms may be able to help avoid immediate negative impact to personal credit scores. For example, they may try to help you apply for multiple cards at one time so that the hard inquiries on your credit files don’t impact your personal credit history until after you approved. Their experience may help you decrease the chances of getting turned down because the process is tailored to your specific needs and qualifications.

Credit card stacking for increased rewards

Some business owners use multiple credit cards to get credit card welcome bonuses. Businesses with significant spending may be able to get sign up bonuses in the form of cash back and travel miles or points. These rewards can be lucrative, but interest costs can be significant if you carry a balance. 

Better budgeting

Some small business owners find multiple credit cards helpful in their entrepreneurial endeavors. For example, they may use different business credit cards for different types of purchases, or for certain projects to better track spending. 

Increased flexibility

When you have just one credit card or line of credit, there’s a risk that the lender could close it for any number of reasons. When you have multiple credit cards, you have more flexibility because you diversify your sources of financing.

Costs of Credit Card Stacking

The above all sounds great, but like all financing options, it comes with some downsides. Stackers charge a fee — often hefty — to help you get approved. We’ve seen that fee hover around 9% to 11% of the approved amount for the credit card stacking companies to apply for credit cards for you. In other words, if you are applying for a $50,000 line, you will likely have to pay $4,500 to the credit card stacking company. 

You’re paying for expertise and for a quick fix to your cash flow problem, but it can come at a high price tag. For many business owners, cash flow issues are life and death for their business, so they’re willing to pay that servicing fee knowing there are other accounts receivable coming their way and they just need to ride out the short-term cash crunch.

Also there’s a real risk of running up credit card debt you can’t pay back if your business isn’t successful. Some cards may carry a low introductory rate, but after that expires the APR may be much higher.

All major card issuers require a personal guarantee when you get a personal or business credit card. If your business is not able to pay back your debt, the issuer may come after the personal guarantor for payment.

What Are Credit Card Stacking Companies?

Credit card stacking companies or stacking lenders can assist entrepreneurs with identifying the best credit cards for their business funding needs. For a fee, they will help your startup or existing business submit multiple credit card applications in an effort to get business financing.

When Is Credit Card Stacking a Good Idea?

Business owners that don’t qualify for traditional small business loans, SBA loans, business lines of credit, or working capital loans may benefit from credit stacking. Additionally, small companies or low-revenue businesses that have yet to accumulate assets and are unable to qualify for a traditional small business loan may want to consider this option. 

It can be a good way to get money quickly — you can usually get approved and receive your cards within seven to 10 business days.

But if you’re using a credit card stacking company it’s important to find one that is reputable as there are scams and questionable practices in this industry. The Federal Trade Commission took action against one company, Seed Capital, in 2021. Don’t be afraid to ask questions and make sure you understand how this financing works, and if you choose to work with a credit stacking company, choose a trusted option.

How Nav Can Help

So is credit card stacking worth it? For business owners who are financially savvy and who know what they’re doing, this process can be very helpful as an alternative to other small business loans. It’s especially popular with startups and for business owners like real estate fix and flippers who may have trouble getting short-term financing.

But if you’re just starting out or have an excellent personal credit score (which will make it easier to apply confidently for any credit cards you like), paying several thousands of dollars in fees may not be a wise use of cash. We suggest doing your homework. Use Nav to help sort and rank business credit cards from major card issuers based on your credit profile to apply with confidence.

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FAQs on Credit Card Stacking

• Can you stack credit cards together?

  Yes. You can apply for multiple credit cards at the same time, or you can hire a credit card stacking company to help do it for you. This process can help you obtain quick financing if your business is considered too high risk to qualify for other small business funding. You’ll need good personal credit scores to qualify.

• Is card stacking illegal?

  The act of card stacking is not illegal in and of itself. As a consumer, you’re allowed to apply for as many credit cards at one time as you want. However, some companies fail to disclose that the funding they offer their customers comes from credit card stacking, which can find the  companies in legal trouble.

  Also some companies encourage applicants to lie about their income on an application which you should not do.

• Is it better to max out a single card or spread debt over multiple cards?

  Typically, it’s better for your credit score to spread out credit card debt so your credit utilization ratio is not too high on any one card. Credit scores compare your balance to your limit when calculating utilization, and this factor can have a significant impact on your personal credit scores and even some business credit scores.

• Is it better to pay down two cards or pay off one?

  This answer depends on your priorities. If your main goal is to save money, paying off your highest rate debt first will save you the most money. If you will be applying for credit, paying down high balances (regardless of interest rate) to lower your utilization ratio may make more sense.

• Is the snowball or avalanche method better?

  There are two main debt payment strategies to choose from: the snowball method and the avalanche method. The snowball method prioritizes paying off the smallest debt first to feel a sense of accomplishment. The theory is that you will be inspired by paying off an entire credit card and that will push you to continue with your debt repayment plan. Meanwhile, the avalanche method tackles the card with the highest interest rate first, no matter the size of debt. You’ll likely pay less interest with the avalanche method, which is why some small business owners prefer it. The route you choose should depend on your circumstances and what will work best for you and your business.

• Is it better to pay a credit card twice a month?

  Most credit card companies report balances to the credit bureaus once a month. Timing is everything here so paying twice a month may reduce the balance reported to the credit bureaus depending on when you make those payments and when the issuer shares information with the credit bureaus. Another benefit is that it may help you free up available credit more quickly to increase purchase power. 

• How do I combine credit cards?

  If you have multiple credit cards with the same issuer, you may want to call and ask whether they can transfer the credit line from one card to the other. You can then close one of the accounts. This can give you a higher credit limit on the card you want to keep, and you may be able to eliminate an annual fee on the card you close. 
  
  If you have cards with different issuers, you may be able to use a balance transfer from one card to pay off another. Depending on how much credit you have available, and the amount you want to transfer, you may want to call the issuer that you’ll transfer the balance to and ask whether they can increase your credit limit so you don’t wind up with high utilization.
  

• Can I transfer credit card points to another card?

  Some cards allow you to transfer points to another card or another person with a similar points program or (for example, Chase Ultimate Rewards). Another option may be to transfer points to another travel partner. For example, American Express Membership Rewards, Capital One, Chase Ultimate Rewards, Citi ThankYou points and most hotel reward programs all have multiple airline and/or hotel partners to which you can transfer points. This may be helpful if you are planning on closing a credit card before you use the rewards you’ve accumulated, or if you don’t have enough points on a particular card to redeem for something you want.