Since Credit cards are now the most common source of financing for America’s small-business owners. (Source: National Small Business Association survey, 2008) Business owners will have stay alert about which credit card they use on purchases.
With the Card Act passing in 2009, the credit card companies are trying to compensate for future low-earning quarters. They are pushing their “professional/business credit cards” with more ‘riskier’ terms.
By claiming these cards aren’t for consumers, they can get around the CARD Act for consumer protection and stick them big fees. Take for instance, the fee if they exceed their spending limits. Under the Card Act for Consumer Protection the Credit Card companies cannot legally impose those fee, but under business credit cards or professional credit cards they can still impose these fees.
According to WSJ, two main credit card issuers Capital One Financial Corp.’s World MasterCard and Citigroup Inc.’s Citibank CitiBusiness/AAdvantage Mastercard are going to be flooding your mailbox with offers. Lots of offers.
But since the Card Act was passed in March 2009, companies have been inundating ordinary consumers with applications. In the first quarter of 2010, issuers mailed out 47 million professional offers, a 256% increase from the same period last year, according to research firm Synovate.
These cards are supposedly easy to get too. These cards are not requiring much information to get accepted.
In January, mailings for the card asked prospective cardholders to provide the name of their company, the nature of the business, its address and its federal employer identification number. In the July mailing cardholders merely had to check a box that said “Yes, I am a business owner” or “Yes, I am a business professional with business expenses.”
It’s easy to see that the Credit Card industry still has some fight left. They don’t want their gold mine to dry up. Penalty fees from credit cards will add up to about $20.5 billion in 2009, according to R. K. Hammer, a consultant to the credit card industry. (Source: New York Times, September 2009)