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Business credit card traps to be aware of

Wednesday, March 16, 2011

Small business owners, who thought that the banks did not care about their needs, now have a reason to smile. Many banks and other financial institutions are now trying hard to woo small business owners with lucrative credit card offers that seem too hard to resist. But, are there offers as good as they seem?

One of the primary drawbacks is that small business credit cards do not come under the regulations of the CARD Act. This is one of the reasons for banks try so hard to please this segment so they can make up for the loss of revenue for personal credit cards. The fact that the business credit cards are not governed by the Durbin amendments implies that banks have the liberty of increasing the interest rates on the credit cards without sufficient notice or valid reason. If you are planning on signing up for one of the small business credit cards, here is some advice that can help.

Compare various small business credit card offers before signing up for one. Since issuers can levy retroactive increases in the rate of interest, lookout for ones that offer low interest rates. The lure of the rewards on these cards may be too tough to resist, but opting for cards just because of the rewards can be your worst folly. Interest rates on business credit cards with rewards is definitely higher that the ones that do not offer them. Outweigh the risks of various cards to make a well informed decision.