Many credit cardholders have now seen advantages in the new Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) and its reforms. Small business, however, may be far from being realized. Business credit cards, were met with increased fees and more rapid changes regarding their payment deadlines, An example of these are the likes of the gasoline charge cards.
Business ownersstates that the credit card issuers have made things more difficult for them, as are now being slapped with late fee charges because the credit card companies have introduced more fees and higher interest rates.
Financial managers claim that such move by the credit card companies is a manifestation of their interest in making up for lost profit. The companies have lost profit over customer credit cards and they are now focusing efforts on business credit cards, financial consultant Bryant Park claims. The late fee in for business owners for their cards nearly doubled from 29 to 50 dollars.
With the CARD Act, payment deadlines were almost reduced by half their usual period from25 to 14 days. Compared with credit cardholders, business card cut-off time for payment on the deadline is at 2pm Eastern time.
With these changes, business card owners are already having concerns over the shorter time allowance for making payments as well as the increased late fee charges. Park says that these changes are among the most sweeping for the business card owners so far this year.
Looking at the reforms of the CARD Act, Park enumerates some protections which do not apply to the business card owners. Some of which are the 25 dollar limit to late fees, prior 21-day notice to be given by credit card issuers before the payment deadline of their cardholders, accepting payments until 5pm Eastern time on the payment deadline, preventing card issuers from increasing interest rates on new cards for a 12-month period, and earlier warning periods prior to rate increases.
Park details that the charges that were analyzed for 2,300 small businesses show that the rates have increased as a consequence of the CARD Act. In the survey, the business card owners are the most vulnerable to the increases due to unequal protection that their credit cardholder counterparts enjoy.
Park concludes by referring to how survey shows that the rate increases for the small businesses is double that of the increase in consumer credit card rates at 30% compared with the latter’s 16%.