Business Credit Cards Carry Bigger Risk in 2010
December 28, 2009
By: Joe Taylor Jr.
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Small business owners rely on credit cards to keep their companies afloat. However, according to a recent Wall Street Journal report, many small business credit cards carry pitfalls and fine print that could surprise some entrepreneurs. Because new banking rules under the Credit CARD Act apply to consumer credit cards and not to business credit accounts, some cardholders may have to look more closely at the kind of card they carry and its potential impact on their bottom line.
Most small business credit card issuers require accountholders to accept liability for company purchases. That way, if a small business closes its doors, a bank can still pursue company owners for their share of outstanding balances. However, a growing number of credit card issuers now track small business cards on company owners' personal credit reports.
The WSJ learned that some business owners have been surprised to find their credit scores lowered or their other credit lines altered after a company credit card's activity inflated their apparent liabilities. Because small business credit cards do not fall under the jurisdiction of the Credit CARD Act, lenders can also adjust terms and conditions with little notice, adding risk for cash-strapped entrepreneurs.
Important Note! The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we can not guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card prior to applying.
