Editorial Policy

Business Credit Cards Get New Protections Too

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By Eva Norlyk Smith, Ph.D.
April 13, 2010

Most credit cardholders could breathe a sigh of relief as the last consumer protections of the Credit CARD Act of 2009 stepped into effect at the end of February this year. Business cardholders, however, were left holding credit cards with the same old rules. For seemingly inexplicable reasons, Congress did not include business credit cards in the changes introduced with the new credit card law.

Now, however, business credit cardholders may be pleased to know that some credit card issuers have voluntarily decided to extend some of the new consumer protections to small business owners as well.

For example, beginning in May, Bank of America’s 2 million small business cardholders will enjoy the same freedom from retroactive rate hikes that their personal credit cardholders do. In addition to eliminating rate increases on existing balances, Bank of America will also provide business credit cardholders with 45 days’ advance notice on rate changes for future purchases and a minimum 25 day period between statement closing date to payment due date. Small business cardholders who carry accounts with Bank of America will also be pleased to see the issuer has laid over-limit fees to rest.

Bank of America, while on the forefront of elective business credit card policy changes, is not the only card issuer venturing into the new terrain; American Express and JPMorgan Chase have also updated policies and protections for business cardholders to bring business credit cards more in line with personal credit cards. Last August, American Express, in addition to cleaning up its statements and adding late payment warnings, set fixed billing cycles for its business cardholders. The issuer also extended same day processing to 5 p.m. Likewise, JPMorgan Chase set fixed statement dates and lengthened payment processing times. As the competition among credit card companies for consumers with good credit heats up, more card issuers may well follow suit.

Some analysts suggest that the greater protections could mean that the business card market could indeed be headed in the direction of greater exclusivity. However, Bank of America refutes this notion: the issuer recently stated that it is committed to increasing small- and medium-sized business lending by at least $5 billion this year.