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How Does Credit Card Stacking Work?

Credit card stacking lets you use multiple credit cards to finance your business. Lenders don’t call credit card stacking by its name because most people negatively perceive credit cards. Instead, you might see it as an “unsecured business credit line for startups” or “FICO lending.”

Whatever it’s called, the goal of BitX Funding is to get you the most credit at the best rate.

You may wonder if there are advantages of going through a lender such as instead of applying for a bunch of credit cards on your own. The primary advantage is that lenders know which credit cards you’re most likely to qualify for based on your credit score, business industry, and other factors.

There are over 1,000 credit cards available in the US, and it could take months to research and compare each. BitX Funding has insider knowledge about all the major credit card companies and banks, and they use that knowledge to help you get the highest credit limits and lowest rates possible.

The other reason for going through BitX Funding is to protect your credit score. Every time you apply for a credit card, the bank that issues the card pulls your credit, which can harm your credit score.

BitX Funding knows which credit reporting bureaus are used by which banks and submits applications strategically to minimize damage to your credit score. By reducing the number of inquiries on each credit report, BitX Funding also increases the credit limits you can qualify for.

Here are the steps for credit card stacking: 

  1. BitX pre-qualifies you based on your personal credit history, type of business, business and personal income, and business credit history.
  2. Based on those same factors, BitX determines which business and personal credit cards you would qualify for that have the highest credit limits and lowest rates.
  3. BitX submits applications for those credit cards on your behalf. Depending on how much financing you need, the lender may submit 10–15 applications on your behalf.
  4. You receive the cards you qualify for and can use them as your business credit line. You will get a monthly statement for each credit card and must make a minimum payment for each. Likewise, you’re welcome to make more than the minimum monthly payment, and any unpaid balance will accrue interest.

Pros and Cons of Credit Card Stacking

Many entrepreneurs are skeptical about using credit cards to fund their businesses. However, as Todd Rowe points out, startups and low-revenue businesses don’t have a lot of financing options.

Personal funds, such as retirement accounts or home equity, are high-risk. Banks prefer large deals with well-established companies that have a proven track record. Options such as merchant cash advances can be extremely expensive and drain a business’s profits before it’s even off the ground. Credit cards give these types of businesses access to unsecured capital at a reasonable cost and on a fast turnaround (typically, 30 days or less).

Another advantage of credit cards is that they can serve as a safety net. You don’t have to use a credit card unless and until you need money, and you don’t have to pay interest on unused funds as you pay down what you borrow; your available credit increases. You can’t get this same level of convenience with a traditional business loan.

On the downside, it is hard to qualify for credit card financing. You require a great personal credit history of 680 FICO or better. If you miss several payments or your business revenues significantly decline, lenders can freeze access to credit without warning. In addition, when you stack multiple credit cards, you have to keep track of multiple credit card statements so you don’t miss any payments.

Will I Qualify?

Credit cards pose a risk to lenders as they are an unsecured form of financing. If borrowers can’t repay the loan, there are no assets to recover the money. However, the lender can pursue the borrower’s assets with a personal guarantee. This, though, is more difficult than reclaiming collateral.

Consequently, most lenders offer credit card stacking only to borrowers with excellent personal credit.  Todd Rowe says you should have a credit score of at least 680. The stronger your credit, the better your rates and the larger your credit line will be.

Your credit quality is just as important as your numeric credit score. You may have a good score, but if you’ve regularly been late on credit card payments in the past, banks may hesitate to approve you for a credit card.

If you don’t have good credit, one tip from BitX is to find a personal guarantor (business partner, family member, or friend) with strong credit. This person promises to pay back the loan if you cannot. If you have a personal guarantor, they will check your credit history instead of yours. In return, you can give him or her some percentage of sales or equity in your business.

Factors other than personal credit come into play. Even if you have great credit, the amount you qualify for depends on your business revenue. If you have a startup or your business isn’t generating significant revenue, the size of your credit line will depend on the income from your day job.

The lender will evaluate your business credit history if you have an established business.  Opening liens or defaults in your business credit history will make qualifying difficult.

Cost of Credit Card Stacking

The primary costs of credit card stacking are the interest rate and annual fees:

  • The interest rate– Credit card APRs range from 10-24 % and average around 15-16%.
  • Credit card annual fees– These are often waived during the first year, but range from about $50-150 per year.

For the first 6–21 months, you will most likely pay a low or 0 % promotional interest rate. This depends on which cards make up your credit line, but most cards that BitX works with offer some kind of introductory interest rate. If you draw on your credit line and pay back what you borrow in full within the promotional period, it’s like borrowing interest-free.

Once the promotional period ends, any unpaid balances will be charged the regular APR. For example, say you make $3000 in purchases during a 0 % APR period, the regular APR on the card is 15 %, and you pay off $2300 during the promo period. Once the promo ends, you will owe $700 (the unpaid balance) plus $105 (the interest on the balance).

When paying off balances on multiple credit cards, it helps to have a strategy. One good option is to make the minimum monthly payment on all cards, and if you have money left over, put it towards the credit card with the highest interest rate.

Some cards charge annual fees. However, this is often waived for the first year. For rewards-earning cards, the fee is typically balanced by points/cash back you can earn using the card.

There’s one additional fee for credit card stacking:

  • A servicing fee charged by the provider typically amounts to 8-15 % of your credit line.

Most BitX borrowers, says Todd Rowe, fall on the low end of this range, and the larger your credit line, the lower the fee will be. For example, if your credit line is $100,000, the average fee will be around $5,000.

Bottom Line

Credit card stacking is still a relatively new, untested form of business financing. A startup or low-revenue business can get thousands of dollars in unsecured funding by stacking multiple credit cards. It’s only open to those with great credit, however. It’s a good idea to add credit cards to your arsenal of options when searching for business financing.

There are many options available for small business financing, including credit cards, loans, and grants. When considering which option is best for your business, it is important to understand the different types of credit cards and loans available, as well as the various interest rates and loan amounts that may be offered.

It may also be beneficial to review your credit reports and consider the financing options that align with your business plan and goals. Some small businesses may qualify for startup business loans or small business grants, which can provide valuable working capital.

Real estate financing is another option for those looking to purchase or improve commercial properties. Ultimately, it is essential for small business owners to thoroughly research and compare the various financing options available to find the one that best fits their needs and goals.

Let us Help

BitX Funding is an online marketplace for small business owners looking to fund a project.

We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and are passionate about helping your company reach its full potential.

You can reach a loan specialist toll-free at 1-800-824-2407 or email [email protected] or apply online here, and we can guide you on which loan is the best fit for your business.




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