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IMPORTANT NEWS FOR SMALL BUSINESS OWNERS

IMPORTANT NEWS FOR SMALL BUSINESS OWNERS

The Pew Charitable Trustsrecently released a study showing millions of individuals and small business owners receive offers for business credit cards each month. While this might sound like a tempting offer for some, you should note that business credit cards are not covered in theCredit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. Consequently, those who use credit cards for business or commercial use are faced with high fees and sudden interest rate hikes.

If your business is structured in such a way that you’re personally liable for your business debt (such as a sole proprietorship or partnership), you are personally responsible for the card. Therefore, your business credit card usage is reported to your individual credit report, which means your personal credit could be negatively affected.

Although the Credit CARD Act has made personal credit easier to comprehend, the rules don’t apply to business credit or commercial credit cards. Pew is concerned about these offers because many small business owners are facing potentially harmful practices by credit card issuers. However, two credit card companies are trying to do right by business owners. After taking a close look at business cards offered by 12 of the largest credit card issuers in the United States, Pew found that Bank of America was the only issuer that eliminated sudden hikes in penalty interest rates. Furthermore, Bank of America and Capital One now use payment policies for business credit cards that mirror the ones required for consumers and now apply payments to the highest-rate balances first. (more)

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Article by SHEIRESA NGO, Black Enterprise | Read full article here