Do you carry a small business credit card in your wallet? Well, it is not necessary that you run a business in order to have this card! Here is another piece of interesting information - business credit cards are not covered by all the new rules and regulations of the CARD Act that has come into existence.
For the consumer this is not really good news. If you have any business credit card with you, there are chances that the banks can increase the interest rate on these cards without giving you prior information about it. This can also be done adhoc and not once every six months as mentioned by the Act. The likelihood of you falling prey to high late fees and penalties for non-payment of dues on time is high, thus pulling you into the dreaded debt trap.
A personal financial expert working for one of the notable financial websites, Gerri Detweiler wondered if this was a move considered by credit card lenders to work around the CARD Act which has tightened the noose around them and curbed their profits. A colleague of hers never started any business, big or small, but was still issued a business credit card by one of the banks.
One of the directors at Synovate who leads the competitive tracking services division, Anuj Shahani, said that this is a practice followed just by a few lenders. It is not something that all banks resort to.
Senator Charles Schumer, representing the District of New York, in early October sent a request to the Federal Reserve to look closely into the banks and financial institutions that are offering business credit cards to people irrespective of whether they have a business or not. He said that this could be one of their dirty tricks to work around the CARD Act and make profits.
According to the new rules implemented in the CARD Act, the billing statement has to be sent to the consumers at least 3 weeks in advance and the cap of the late fee is set to $25. Also, no bank can increase the interest rate of the credit card for the first 12 months after it has been issued unless informed otherwise to the customer well at the time of processing the application. However, these new rules do not hold true in the case of business credit cards.