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Small Business Card Users Need More Protection

Written by Ken Gaebler
Published: 5/31/2011

Business credit card solicitations pose a risk to personal credit card users.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 protected credit card users from two-cycle billing, unilateral APR increases and certain fees. However, news for small businesses was not as positive, since credit cards used for work purposes were exempt from these protections.

Small Business Credit Card Protection

The Pew Charitable Trust points out that 67 percent of business credit cards still include penalty rates for late payments - a rule that directly contradicts the CARD Act's stipulated protections.

Nevertheless, business credit cards are still being sent in the mail, which puts non-business owners at risk. Bloomberg points out that 30 percent of business credit card solicitations go to households with annual incomes of less than $50,000, according to the Pew report.

"Every month more than 10 million business credit card offers are mailed to households at all income levels," said Nick Bourke, director of Pew’s Safe Credit Cards Project. "The sheer number of offers that are sent to homes all across the nation represents a risk to millions of American families."

One way for business owners to stay protected may be to use their personal credit cards for company transactions. However, charges to a consumer card used in business transactions might be harder to qualify as business tax deductions.

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