Small business owners are being targeted by lenders who are offering credit cards with excellent rewards schemes.
It is clear to see why this has come about as it has come to light that 42% of small businesses have a company credit card balance, according to the National Small Business association data from July 2011.
These cards however can affect your credit rating as they traditionally do not come with consumer protection that you would expect to find on cards for personal use. This has led to many lenders to concentrate on credit cards for small businesses due to the fact that they are less protected than normal. Credit cards for small businesses have been exempt from the Credit Card Accountability Responsibility and Disclosure Act of 2009 that stopped lenders from hiking up interest rates randomly and other practices on credit cards for personal use.
With personal cards, the lenders are not allowed to raise the interest rates on balances except for when the cardholder’s payment is late for sixty days or more. However for small business cards the lenders can actually charge whatever they want so says Odysseas Papadimitriou the chief executive of CardHub.com, a comparison website for credit cards.
So this means that if you are paying differing interest rates for purchases and balances then the amount you pay monthly if it is above the minimum requires can actually be attached to the balance that has the lowest interest rate first, so says Bill Hardekopf, chief executive at Low Cards.
This is in contrast to credit cards for personal use that always put the payment on the higher rate to start with in order to lower the cost to the borrower.
The lenders explain that all they want to do is provide the small businesses with spending power and they expect more small businesses to be formed as the economy improves and they would like to sign these new businesses as customers.
In the longer term the credit cards that are aimed at small businesses can help the smaller business to obtain to create a credit history with one of the credit bureaus that specialize in small businesses, says John Ulzheimer, the president in charge of consumer education of credit monitoring site Smart Credit. This might very well make the chances of getting approved for financing a lot cheaper and simpler.
Similar Credit Card News:
- [January 12, 2011] Why Banks Trying to Reel in Small Business
- [March 3, 2011] Balance Transfer Cards Make A Comeback
- [October 11, 2010] The CARD Act and Your Interest Rate
- [September 14, 2010] New Fees to Expect From Credit Cards
- [August 30, 2011] Business Owners Get Cash Back From Capital One
- [August 18, 2011] Gap Between Rewards and Non-Rewards Cards Widens
- [August 16, 2010] Consumer Credit Card Payments Improve In July
