Will Credit Card Reform Abandon Small Business Owners?

Posted by: John Tozzi on April 29, 2009

Congress is scheduled to vote on the Credit Cardholders Bill of Rights Thursday, which would protect cardholders from some aggressive practices like two-cycle billing, applying payments in a way that maximizes interest charges, and others (more detail here from the blog Credit Slips.) But will the bill help small business owners?

The bill is an amendment to the Truth In Lending Act, a consumer protection law that doesn’t apply to business-to-business transactions. So like the Fed rules passed last year to limit credit card abuses, the Credit Cardholders Bill of Rights wouldn’t apply to the growing number of small business credit cards out there that function essentially the same way as personal cards.

These small business branded cards are personally guaranteed and based on the owner’s personal credit score. “In every way it looks like a personal card,” says Todd McCracken, president of the National Small Business Association. And with traditional sources of credit harder to get, small business owners increasingly rely on credit cards.

Reps. Nita Lowey (D-NY) and Neil Abercrombie (D-Hawaii) are offering an amendment to expand the protections to small business cards that’s scheduled to be voted on in committee this afternoon. The NSBA has more here.

Reader Comments

John

April 30, 2009 07:03 PM

There is no reason for credit card rates of 20-50% when our inflation is in the low single digits and prime is in similar ranges.

There is no reason for allowing them to rape the american public with that kind of usury.

How about protecting our ecomonmy, and American citizens by putting a reasonable cap on card rates that is not more than 10% above prime?

That help stop the credit card defaults, auto loan defaults, and mortgage loan defaults, when the credit card companies force people into default on all loans by pushing rates and payments several times what consumers initially agreed to with rates less than 10% initially ... or even into bankruptcy where all lenders suffer because of the credit card abuses ... and in the end, all Americans which pickup the tab for those unnecessary defaults.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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