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Consumers with business credit card face tremendous risks

Wednesday, June 22, 2011

One of the nonprofit research groups actively studying the trends in the credit card industry has warned customers receiving emailers from banks for business credit cards to discard them without second thoughts. These are credit cards that are given out to various organizations such as sole proprietors, small business owners and other corporations to make the task of book keeping easier and differentiate between person and professional expenditure. However, banks today are marketing these business credit card offers to even individuals irrespective of whether they own a business or not.

While customers may feel thrilled about these cards being offered to them, banks have an ulterior motive in extending these offers to everyone and not just business owners. The implementation of the CARD Act in 2009 and 2010 placed a stop on many fees and charges that were helping banks generate revenue. Consumer credit cards were offered high level of protection and the entire credit card industry became more transparent in its operations.

But one of the major loopholes in the CARD Act is that the rules and regulations of this act are only applicable to consumer credit cards and not to business credit cards. Banks which were facing threats to reduced revenue to the CARD Act now found a way to make up for this loss. Banks and other financial institutions have started aggressively marketing business credit cards to almost every customer since they lack the protections that consumer credit cards enjoy. Since these cards do not have any limit of the late payment or the interest rate hikes, banks have an upper hand. Hence, customers with these cards are at greater financial peril and need to be more responsible about their business card usage.