Small Business Owners Left Out of Credit Card Act

Most credit cardholders just got a bundle of new protections from the Federal government. After being signed by the President last May, new credit card rules went into effect February 22. The new rules put a halt to many predatory practices credit card companies have used to squeeze money out of their credit card users.

No help for small business credit cards

Not every credit card user benefits from the law. Commercial credit cards, which include small business credit cards, weren’t included in the new law. As a result, small business owners are left to continue to deal with rising interest rates, lower credit limits, and surprise fees.

Some business owners might think simply using a personal credit card to pay for business expenses will give them protection under the new credit card rules. However, switching to a personal credit card won’t solve the problem. Even a personal credit card that’s used primarily for business is excluded from the new rules.

While small business owners don’t get the same legal protection for business credit cards as personal credit cards, they do have to pay the same cost, especially in terms of credit scores. Some personal credit cards have started reporting business credit cards on personal credit reports. Capital One is one of them, according to CNN. That means late payments and high credit card balances on a business credit card could affect your personal credit score.

Smart use is the better option

Business owners who are worried about rising interest rates can avoid the effects of higher interest rates by paying their balance in full each month. That way, they won’t pay higher finance charges. Of course, credit card companies can find other ways to make small business owners suffer, for example, by introducing new credit card fees or slashing credit limits.

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Will credit costs pass on to small businesses?

The new rules could actually hurt small business credit card users. If the law results in a multi-billion loss for credit card companies, they’ll likely look toward small business credit cards to recoup those losses. It won’t be hard to push the cost of credit onto small businesses since those credit cards have fewer regulations.

Credit card law for small businesses

Help may be on the way for small business credit cards. The new credit card law requires the Federal Reserve to look into credit card use in companies that have 50 or fewer workers. The study will check to see whether there should be small business credit card regulations based on current pricing, disclosure, and availability of credit for small business owners. Visit the Federal Reserve’s website to leave a comment on your credit card experience.

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