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In recent years, a lot has changed with regard to credit card stacking. Credit cards have become more and more popular as they can be used at almost any store and online purchases are made easier by their use of electronic transfers.
Credit card stacking is a way for you to fund your startup with credit cards. This technique makes it possible for you to get cashback on every purchase that you make.
The practice of applying for many credit cards at the same time as an alternate funding source for startups and small enterprises is known as credit card stacking. Some company owners, particularly those who would otherwise be unable to get business finance, utilize credit card stacking to obtain a big line of credit to meet their working capital requirements.
What Is Credit Card Stacking and How Does It Work?
Credit card stacking is similar to an unsecured line of credit in that it allows you to finance your company with many credit cards. Your unsecured line of credit, which is revolving and may be utilized several times, is represented by the aggregate limits of your stack.
Stacking credit cards is an alternative to taking out a business loan or a company line of credit. If you don’t have any assets to use as security for loans, this is an excellent choice. Because corporate credit card stacking includes an unsecured credit line, it is considered high risk, and most suppliers need credit ratings of at least 680 to be eligible.
Here are a few important things that you need to remember about What Is Credit Card Stacking and How Does It Work?:
- It’s a rotating limit for you: When you use your credit cards, you are drawing on your credit limit, and you must pay your debt on a regular basis. The credit limit will be available for usage after you have repaid the amount you borrowed.
- The unpaid debt will earn interest: The remaining outstanding amounts on each of your monthly bills will accumulate interest until they are entirely paid off, just like any other business credit card. Interest rates may vary depending on the credit card company.
- There is no need for collateral: You don’t have to put your company or personal assets up as security with an unsecured credit card.
- A personal guarantee will be required: Credit card stacking usually requires a personal guarantee. If your firm defaults on its financial commitments, it gives your lender the ability to seek your personal assets.
- Your credit card balance, including interest and charges, must be paid: If you don’t pay your credit card bill, the company will contact you on a regular basis to try to collect payment. Your debt will be charged off and sold to an external collection agency or forwarded to in-house collectors if no payment is made after 180 days. Until the charge-off account is repaid, you are still responsible for it, including fees and interest charges.
Who Should Use Credit Card Stacking?
Credit card stacking is ideal for entrepreneurs who may not be eligible for standard company financing choices such as SBA loans, business lines of credit, or working capital loans. For people who want financing but are unable to qualify for conventional small company loans, this is a potential choice.
Credit card stacking is appropriate for the following situations:
- Modest-revenue firms: Existing businesses may still utilize credit card stacking for funding provided their revenues are quite low. Because your personal credit score is generally utilized to qualify, and low yearly revenues won’t usually exclude you from this financing option, this is a viable alternative for low-revenue firms.
- Quick funding requirements: If you need money quickly, this is a good alternative since you may usually be accepted and have your cards within seven to ten business days.
- Credit card stacking is also advantageous for business owners who do not have assets to use as collateral since it does not need any. This makes it a viable alternative for individuals who do not have assets to use as collateral.
Credit Card Stacking Companies: What Are They?
Stacking lenders, also known as credit card stacking firms, assist you in finding the correct credit cards to apply for and submit your applications on your behalf. While you can do it yourself, a stacking lender can assist you with identifying the best credit cards for your company and narrowing down your choices. They do, however, often charge a yearly upkeep fee of 8% to 15% for their services.
A credit card stacking firm may help you with the following:
- Find out which credit cards you could be eligible for: To determine which credit cards you will qualify for, credit card stacking businesses analyze your personal and business credit ratings, your company industry, revenues, and other variables.
- Find the best credit cards: With more than 1,000 credit cards available in the United States, comparing them all to see which ones provide the best conditions and prices would take a lot of time and effort. A credit card stacking firm employs its deep knowledge of banks and card issuers to assist you in finding the best annual percentage rate (APR), best introductory rate, and best offers according to your organization’s needs.
- Protect your credit score: When you apply for a credit card, the card issuer pulls your credit report, which might negatively affect your credit score. Credit card stacking firms may assist you to safeguard your personal credit scores by carefully submitting your applications, reducing the amount of hard credit pulls on your credit record.
How Credit Card Stacking Firms Operate
To determine which cards you would most likely qualify for, a credit card stacking firm will examine your credit reports, business industry, revenue, location, and other criteria. After that, it will apply for personal and commercial credit cards on your behalf. A credit card stacking organization would often submit seven to fifteen applications at once to assist you to get the entire credit limit that you want.
Once accepted, you may use your credit card stack as a line of credit to support your small company or startup right now. An annual service fee ranging from 8% to 15% of your total credit limit will be charged by the credit card stacking firm. The charge may differ according to the stacking lender.
For each credit card, you’ll get a monthly statement and, in most cases, an introductory APR of 0% for the first 6 to 18 months. Interest will be charged on any outstanding amounts after the promotional period has ended. To prevent paying extra fees, keep note of each card’s interest rate, length, credit limit, statement cycle, and due date.
Stacking Credit Cards Has a Price
- APR: 11 percent to 25% variable, based on prime rate.
- Annual card costs range from Annual card fees: $0 to $500 or more, sometimes waived for the first year to $500 or more, with the first year’s price occasionally waived.
- The maintenance fee charged by a credit card stacking firm ranges from 8% to 15% of your credit limit, and it only applies if you employ the services of a credit card stacking lender.
Some credit cards provide a zero percent APR introductory period for the first 6 to 18 months, depending on the card issuer. It’s like borrowing money without paying interest if you use your line of credit and pay it back in full during the promotional time.
When the promotional time expires, your outstanding amounts will be subject to the card’s annual percentage rate. Keep in mind that the amount of interest you pay will vary on each card, so keep track of the interest rates and introductory periods for each one.
How to Stack Credit Cards Without a Stacking Lender
While credit card stacking businesses might help you, you can also do it yourself to save money on yearly maintenance costs. Keep in mind that credit card stacking businesses may charge you anywhere from 8% to 15% of your entire credit limit, which can quickly mount up.
1. Obtain Prequalification
Your personal credit score, kind of company, business and personal income, and business credit history are used by credit card companies to determine your eligibility. You need to have a credit score of at least 680 to qualify. If your credit score isn’t great, you may locate a personal guarantor who agrees to let the bank use their credit score instead of yours and pledges to repay the bank if you can’t.
2. Selecting Credit Cards
One of the most important aspects of credit card stacking is selecting the correct credit cards for your stack. Which credit cards would be ideal for your stack depends on your company’s spending objectives and the benefits or bonuses you wish to obtain. Examine the prices and fees, such as the yearly card charge and prospective APRs, to determine which is best for your company.
3. Complete and submit your applications
You may apply for the finest credit cards for startups online and get a verdict in minutes. It’s crucial to understand that doing repeated rigorous credit checks while applying for various cards will harm your credit score. To reduce the negative impact, restrict the number of cards you apply for.
4. Obtain Your Credit Cards
You should get your cards within 7 to 10 days after being accepted. These may be utilized as an unsecured line of credit for your company to assist support your startup. You must pay at least the minimum payment for each card on each monthly statement, and any outstanding amounts will incur interest during the following billing cycle.
Conclusion
Credit card stacking is a sort of unsecured company financing that enables you to finance your startup using a credit card. If you’re having problems qualifying for an SBA loan or want to earn cash incentives, card stacking is a fantastic financing choice. If you don’t want to keep track of many credit cards, you might look into alternative business financing possibilities.
Frequently Asked Questions
Can credit cards be stacked together?
This will depend on the type of credit card, how you would like to use it and whether or not your bank allows this.
Can you combine all your credit cards into one?
No, it cannot be done.
What is credit card stacking?
Credit card stacking is a tactic where someone uses multiple credit cards to accumulate debt and in turn, they get rewards.
