Corporate credit cards for consumers–lethal or hot?
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® Business Card from Costco and American Express. The other Forbes recommendation was the Ink CashSM Business Card from Chase. Both are cash back rewards cards.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
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