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Business Credit Cards Still Pose Major Risks to Firms and Households
Published on May 18, 2011
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Because 2009's Credit CARD Act failed to extend consumer protection regulations to business credit cards, a number of businesses and households open to these cards are at substantial risk of incurring harmful debt and financial obligations.
A new report released this week by Pew Health Group found 84 percent of business cards distributed between 2006 and 2010 gave issuers the sole power to apply payments to low-rate balances first, effectively maximizing charges on higher-rate balances.
In addition, 67 percent of business cards included penalty rates for late payments or overdraw transactions. Another 80 percent of cards include "any time" changes, meaning issuers can change terms without notice and without the option to opt out.
"Every month more than 10 million business credit card offers are mailed to households at all income levels," said Nick Bourke, director of Pew's Safe Credit Cards Project. "To better protect individuals, families and small business owners we urge that the safeguards found in the Credit CARD Act be extended to any card on which the cardholder is personally liable."
A recent study by CardHub.com found Bank of America to be the only financial institution to have extended 100 percent of these protections to their business credit cards.