Credit Card Stacking: What Is It and Is It Worth It?

Credit Card Stacking: What Is It and Is It Worth It?

Credit Card Stacking: What Is It and Is It Worth It?

Credit card stacking is the strategy of applying for multiple smaller lines of credit or credit cards in a specific order to access a larger unsecured line of credit than individual business credit cards can offer. We spent some time looking into this option to 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 looks at your business credit scores, industry, and location to identify banks that will work with you.
  2. They submit business and personal credit card applications to the banks for you. It’s not uncommon for them to submit seven to 15 credit card applications so your total credit limit will reach your funding goal. In other words, they stack up multiple credit cards to reach your desired loan amount.
  3. Credit card stackers will only apply for cards that you are likely to qualify for and that have the lowest APR (most likely 0% intro APR for the first six to 18 months) and possibly rewards, like a cash back business credit card. Your personal guarantee is your personal credit score, which usually needs to be above 680. Their pitch is that it’s hard for you to find the best credit cards yourself, but they are experts in business and personal credit cards. They will also try to apply for 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. Even if you have very high credit utilization on your business credit cards, if those business credit card issuers don’t report ongoing payment history to the consumer credit bureaus, your personal credit scores won’t be affected. (Keep in mind that if you default or miss payments on a business credit card, the issuer may have a “negatives only” policy in reporting to the bureaus and your credit could be impacted in this case.)
  4. Once the credit cards are approved and issued, you can use them as the business line of credit. Your intro APR will mostly likely be low (or 0%) so you are paying very low rates on your monthly payments for the first six to 18 months.
  5. If you need to get cash out of the credit line, they will also teach you how to do that without incurring a lot of cash advance fees. Usually, this is achieved through credit cards from credit unions where fees are low for members.

Benefits of Credit Card Stacking

By strategically submitting your applications, credit card stacking firms can safeguard your personal credit scores by decreasing the quantity of hard credit pulls on your credit record. In addition, credit card stacking can help you improve your credit while increasing your chances of larger funding in the future. It also decreases the chances of getting denied because it’s tailored to your specific needs and qualifications.

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.

What Are Credit Card Stacking Companies?

There are companies that will help your startup identify and apply for the best credit cards and then submit your applications on your behalf. These are known as credit card stacking companies or stacking lenders. A credit card stacking company can assist entrepreneurs with identifying the best credit cards for your business and narrow down the options, even though you can do it on your own.

When Is Credit Card Stacking a Good Idea?

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

It’s also a good way to get money quickly — you can usually get approved and receive your cards within seven to 10 business days. Best of all, it’s completely legal, although we caution that if you’re using a credit card stacking company that you find one that is reputable.

However, keep in mind that there are scams out there, like the Seed Capital scam that the Federal Trade Commission cracked down on in 2021. Read the fine print and ask questions to make sure you understand how the 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.

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), a $4,500 fee may not be a wise use of cash. We suggest doing your homework and signing up for Nav — you can use our tools to sort and rank business credit cards from all the major issuers based on your credit profile to apply with confidence.

FAQs on Credit Card Stacking

This article was originally written on April 16, 2015 and updated on September 30, 2022.

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2 responses to “Credit Card Stacking: What Is It and Is It Worth It?

  1. I’m a new with no sales looking for immediate equipment purchasing marketing funding and hiring to promote my websites on all social media outlets an affiliate e-commerce. I do however have good credit and could you give me information on what you require. Thank you sincerely,

    1. Please feel free to set up a free Nav account. You’ll then see financing matches in your marketplace tab (if available). At any time you are welcome to reach out to our Credit & Lending specialists for one-on-one help. You can schedule a time through your Nav account.