Credit Card Solution

Credit card regulation and business cards

Last week (September 6), this blog warned readers that some card issuers are mailing credit card offers for business products to people even though they know the addressees aren’t businesses. Some don’t even use the terms “business credit card” or “corporate credit card” in the solicitation, instead describing the product as “professional.”

The reason? The latest wave of credit card regulation doesn’t cover business cards, so those issuers making these offers are hoping to ensnare consumers in agreements that still permit abusive lending practices.

Business credit card excesses

Just how abusive those practices can be was highlighted yesterday in The Sacramento Bee. It recounted the story of Misty Seeley, who runs a small business in Rancho Cordova, CA. She told the Bee that her issuers had shortened the time she has to get in a payment after receipt of her statement from 25 days to 14 days. And they have increased her late fees from $29 to $50. Neither of those moves would be legal for consumer cards under the Credit CARD Act of 2009. In fact, it caps late fees–except in exceptional circumstances–to $25.

Misty Seeley is clearly an astute woman, because she zeroed in on the issue when she observed: “The credit card companies have to make their money somewhere. Now it’s coming from small businesses. It’s really frustrating.”

Credit card rates rocket for businesses

It’s not just fees that are causing businesses problems. Credit card rates on corporate products have increased substantially too.

Last week, Transworld Business reported that some business credit card users are paying rates of over 30 percent, which is very nearly double the average for all credit card rates (16.79 percent) quoted by index credit cards today. One expert told Transworld Business:

We predicted earlier this year that small businesses would be subject to rate increases as the banks try to make up for lost consumer revenue resulting from the CARD Act. Since small businesses aren’t protected, they appear to be an easier target for card rate hikes.

Business credit card rewards can be attractive

If you’re not sufficiently organized to meet challenging due dates every month, or you’re not sufficiently wealthy or prudent always to pay off your balance in full, then any business/corporate/professional credit card offers you receive should almost certainly be fed straight into the shredder. But, as a blogger on Forbes pointed out a couple of days ago, if you can manage such a product well, then you could possibly think twice.

The thing is, some business cards are actually pretty good for those whose credit card use is highly disciplined. Forbes recommended two that have particularly strong cash back rewards programs, and this blogger is happy to pass them on with one caveat–it’s not known whether their issuers are among those that allow private individuals to hold their business cards.

Two business products with good credit card rewards

The first that Forbes mentioned was the True Earnings® Card from Costco and American Express. This gives cash back at four percent for gasoline purchases of up to $6,000 a year (one percent on anything above that), three percent in restaurants, two percent on travel, and one percent for everything else.

The other Forbes recommendation was the Ink CashSM Business Card from Chase. This is another straight cash back product, and it offers three percent at gas stations and restaurants, and on office supply and home improvement purchases. You get one percent on everything else.

Most popular / best credit cards according to IndexCreditCards.com visitors:

1. 1. Discover® More Card – 0% APR on balance transfers for 12 months & 6 months on purchases, 5% cashback bonus in popular categories, up to 1% cashback bonus on all other purchases
   
2. 2. Chase Freedom Card – 0% Intro APR and no Annual Fee, 5% bonus cash back in popular categories , 1% cash bank on everything else
   
3. 3. Citi^® Platinum Select^® MasterCard^® – 0% on purchases & balance transfers for Up to 18 months, APR as low as 9.99% variable. $30 statement credit.
   
4. 4. Blue Cash^® from American Express – Earn up to 5% cash back on gas, groceries and drug store purchases, and up to 1.5% back on all other purchases, no annual fee, fast approval under 60 seconds
   
5. 5. Slate ^SM from Chase – 0% Intro APR, Now with Blueprint, patented fraud protection
   
6. 6. American Express® Gold Card – 10,000 American Express Membership Rewards bonus points when you use the card for at least $500 in purchases within the first 3 months.
   
7. 7. TrueEarnings® Business Card from Costco & American Express – 4% cash back for annual gas purchases up to $6,000, 3% restaurants, 2% travel, 1% everywhere else, 0% APR on purchases for first 6 months
   

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• Credit card offers that are traps set for the unwary
• Capital One Spark Cash Business Credit Card Review
• Credit cards–how to choose the best
• Bank of America Cash Back Credit Card Review
• Best Cash Back Credit Card