Amidst all the junk mail and endorsements that you get in your mailbox every single day in the last few months, you might also have observed a solicitation for a professional card also known as a corporate credit card. If that is true you have to watch out more carefully. Although the World MasterCard from Capital One Financial Corp and the Citibank CitiBusiness/AAdvantage MasterCard look like any other credit card on offer, they couldn`t have been more different.
The interesting thing is that these professional cards aren`t covered under the latest regulations passed through the Credit Card Accountability and Responsibility Disclosure Act of 2009. The law amongst other things prohibits some controversial billing practices that are pursued by the credit card issuers to enhance their profitability. Another thing the Act takes care of is the sudden increase in interest rates of the credit card without prior notice to the customers. The bad news is that the rules do not really apply for professional cards.
Until now, only owners of smaller businesses and corporate executives were those for whom these professional cards were reserved. But ever since the new rules and regulations have been passed to bring reforms in the credit card industry, companies have been flooding the mail boxes of ordinary consumers too with these applications. In the first quarter of 2010 alone, the credit card issuers have sent the mails to over 47 million people. This represents a 256% increase from the same time last year as per the research firm Synovate.
The strictures passed by the Card Act have reduced the profitability of credit card issuers to a large extent. The credit card companies also haven`t been able to operate freely because of these rules and regulations. Banks would want to make up for some of the lost revenue by pulling customers out of the protected cards into the professional cards. According to Josh Frank one of the researchers at Center for responsible Lending, one of the consumer groups, credit card issuers are trying to get around some of the terms of the card Act. They are doing so by pushing professional cards to consumers who wouldn`t otherwise opt for these cards.
A lot of solicitations from J.P. Morgan Chase and Co. have gone to the mailbox of John and Gloria Harrison, a retired military couple living in Destrehan La, outside New Orleans. This includes offers for an Ink from Chase Card too.