Credit card stacking is a strategic method of obtaining multiple — personal and business — credit cards at once, which allows a business owner to receive potentially significant sums of capital (without collateral) through numerous funding rounds at 0% interest.

The Benefits of Credit Card Stacking

Credit card stacking is a great way to jumpstart any business and the quickest way to achieve funding at any time for your business. Stacking is arguably the most viable funding option for business owners. A “round of funding” is the 12-21 month period during which the credit card company charges 0% interest on the utilized funds. The card stacking is considered a long-term strategy and can be used many times over to get the 0% interest rate. It is vital to make the most of the funds available during the period of 0% interest to make the most of this strategy. Many business owners use the available funds to invest in real estate or pay off previous debts.

Many business owners choose to apply for personal and business credit cards to access more money. You can choose to apply for only personal cards or only business cards, but because your personal liability remains, both are viable options to obtain funding. Choose only business cards if you don’t want the debt to appear on your personal credit profile.

When you apply for credit cards, the companies make an “inquiry” to see your credit profile. These inquiries can temporarily lower your credit score. However, you are often approved before lenders address the inquiries. As a result, your credit score fluctuates as you use this strategy, but the score will go back up once you’ve paid the card back down below 40% utilization before the 0% interest rate goes away.

Strategies to Consider

To ensure that your business pays back the credit before the window ends, track the exact time window for the 0% interest offers and the credit in use with a spreadsheet. Credit utilization is the total amount of those funds in use divided by the total amount of debt. You need every card in your “stack” under 40% utilization. It is wise to pay back the debt evenly across each card to get back to baseline so you can engage in a new round of funding through 0% interest cards.

You’ve achieved something incredibly rare by paying off or getting below 40% utilization. Your credit score will skyrocket, and your credit profile will improve dramatically. The complete utilization stays on your profile forever as “high balance” and is read as a positive thing in the lender’s eyes. Because of your rare history, you’ll see an increase in limits anywhere from 100-400% in the next round of funding.

Real estate investors, for example, are always seeking to maximize their access to capital. Credit card stacking will continually increase their access with each round of funding. Go after as many cards as possible in your first round for business funding. Even if you’re approved, keep all those cards for the possibility that you’ll need them.

Without collateral, the funding from credit card stacking is unsecured without any legal ties to your assets. You could be forced into bankruptcy as a worst-case scenario and have to start over to build a credit profile. However, every business can benefit from this strategy because it doesn’t have terms to the funding, and the interest rates are much lower (even after the 0% window ends). You’ll only pay for what you use in this business credit line. With simple management, it is well worth the growth opportunities.

A bonus to this strategy is that this builds your bank rating. Know what you want and ask the banks how you can get it if you bank with them. To get around the bank’s algorithms for funding, flip the script and tell them precisely what you do and why you’ll need money. This strategy requires you to shift to an investor mindset about money. Propel is here to help you learn and succeed in the game of funding.

Book a business analysis with one of our advisors to see if stacking is a good funding option for you.