17May
What Does the Credit Card Act Mean For Small Business?
Posted by Steven Teo in Finance & Capital
I’ve recently had a lot of people ask me about the new credit card act and how it will affect their small business? We all know that the new law offers a variety of protections to consumers and might possibly change the credit card industry forever. The question is what’s in it for the owners?
Unfortunately, business and corporate cards have no new protections under the act. The provisions contained in the Credit CARD Act of 2009 are designed mainly to protect consumers from unfair credit card practices, not small business.
Most of the major provisions of the act went into effect February 22, 2010, with the rest starting later in December and August of this year. Under the new law,
* Double cycle billing charges, over-the-limit fees, retroactive interest rate increases, and excessive fees on subprime credit cards have all been eliminated.
* Consumers have been granted greater time to pay their monthly bill, and need to be over 60 days behind on a payment before an issuer can increase the interest rate on a balance.
* Credit card companies must give at least 45 days notice of any changes in a borrower’s terms, with the borrower possessing the right to opt out of those changes, if desired.
* Credit card issuers won’t be able to increase rates within the first year of a customer opening an account.
* Card issuers are restricted from giving credit cards to those under 21 unless they have a co-signer or can otherwise prove that they have a means to pay.
One has to wonder why Congress would enact such a sweeping credit card reform and not include provisions for small business? Or, moreover, why couldn’t the new protections be extended to cover commercial card users as well?
Business and commercial credit cardholders have been fighting tooth and nail with card companies over abusive and unscrupulous practices for quite some time. Ever-increasing interest rates, continuous introduction of new fees, and frequent increase of existing fees have made it more and more costly for small businesses to use and accept credit cards. Even offer merchant services providers (companies that enable businesses to process credit cards) from large banks like Bank of America and Wells Fargo, to ISO’s like North American Bancard, have all felt the pinch of card companies soaring rates.
For those of you that are thinking of setting aside a personal card for business so that you can take advantage of the act- that probably wouldn’t be the best idea. Using a personal credit card for business lessens the amount of interest and/or various fees that you are able to deduct on your taxes and all activity and debt made on behalf of your business shows up on your personal credit score. Also, keep in mind that the blending of personal and professional finances can lead to serious money management problems.
It’s been hinted that much-needed relief is on the way for commercial and business credit card owners. The Fed has recently been tasked to examine small business credit card usage and make protection recommendations to Congress within the next year. Let’s hope so because it’s long, long, long overdue.
About the Author
Robert Sommers is a freelance mortgage and small business writer based out Baltimore. He has worked for over 25 years as a licensed real estate agent in all areas of commercial and residential real estate.
What Does the Credit Car Act Mean For Small Business?
I’ve recently had a lot of people ask me about the new credit card act and how it will affect their small business? We all know that the new law offers a variety of protections to consumers and might possibly change the credit card industry forever. The question is what’s in it for the owners?
Unfortunately, business and corporate cards have no new protections under the act. The provisions contained in the Credit CARD Act of 2009 are designed mainly to protect consumers from unfair credit card practices, not small business.
Most of the major provisions of the act went into effect February 22, 2010, with the rest starting later in December and August of this year. Under the new law,
- Double cycle billing charges, over-the-limit fees, retroactive interest rate increases, and excessive fees on subprime credit cards have all been eliminated.
- Consumers have been granted greater time to pay their monthly bill, and need to be over 60 days behind on a payment before an issuer can increase the interest rate on a balance.
- Credit card companies must give at least 45 days notice of any changes in a borrower’s terms, with the borrower possessing the right to opt out of those changes, if desired.
- Credit card issuers won’t be able to increase rates within the first year of a customer opening an account.
- Card issuers are restricted from giving credit cards to those under 21 unless they have a co-signer or can otherwise prove that they have a means to pay.
One has to wonder why Congress would enact such a sweeping credit card reform and not include provisions for small business? Or, moreover, why couldn’t the new protections be extended to cover commercial card users as well?
Business and commercial credit cardholders have been fighting tooth and nail with card companies over abusive and unscrupulous practices for quite some time. Ever-increasing interest rates, continuous introduction of new fees, and frequent increase of existing fees have made it more and more costly for small businesses to use and <a href=” http://www.nabancard.com/accept-credit-card/“>accept credit cards</a>. Even offer <a href=”http://www.nabancard.com/“>merchant services</a> providers (companies that enable businesses to process credit cards) from large banks like Bank of America and Wells Fargo, to ISO’s like North American Bancard, have all felt the pinch of card companies soaring rates.
For those of you that are thinking of setting aside a personal card for business so that you can take advantage of the act- that probably wouldn’t be the best idea. Using a personal credit card for business lessens the amount of interest and/or various fees that you are able to deduct on your taxes and all activity and debt made on behalf of your business shows up on your personal credit score. Also, keep in mind that the blending of personal and professional finances can lead to serious money management problems.
It’s been hinted that much-needed relief is on the way for commercial and business credit card owners. The Fed has recently been tasked to examine small business credit card usage and make protection recommendations to Congress within the next year. Let’s hope so because it’s long, long, long overdue.
About the Author
Robert Sommers is a freelance mortgage and small business writer based out Baltimore. He has worked for over 25 years as a licensed real estate agent in all areas of commercial and residential real estate.
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