WASHINGTON—Bank of America continues to be the most small business friendly credit card company, according to a new report.
According to CardHub’s 2015 Small Business Credit Card Report, despite 37% of small businesses relying on plastic for funding, small business owners are typically not afforded even the most basic of consumer rights—such as the ban on arbitrary interest rate increases on existing debt.
“Congress pretty much left the small business community out in the cold by not including credit cards branded for business use within the scope of the Credit CARD Act of 2009,” CardHub stated. “That might not seem like too big of a deal at first, but consider all the CARD Act has done for consumers in recent years.”
The fact that issuers are allowed to reprice business credit card debt whenever they want means the 37% of small business owners who use credit cards for financing purposes each year are never assured of how much their debt will cost, CardHub explained.
“Credit card debt instability is a huge problem for smaller businesses—particularly younger businesses since they rely more heavily on credit cards,” Molly Day, VP of public affairs for the National Small Business Association, told CardHub. “If entrepreneurial people can’t garner the capital to launch a business we’ll see fewer start-ups, which means slower employment growth and less innovation.”
Some issuers have decided to proactively extend certain consumer protections to their business-branded products. The CardHub study analyzed differences in the ten largest credit card companies’ policies. Some highlights:
- All major credit card companies hold customers personally liable for business credit card use. Also, every major issuer uses personal credit data to determine business credit card eligibility.
- Bank of America is the only major bank to have extended all of the major CARD Act protections to its business-branded cards.
- Bank of America and Citi are the only two major issuers that do not report business card activity to customers’ personal credit reports.
- Discover, U.S. Bank, and Wells Fargo are the least small business friendly credit card companies, having extended the fewest CARD Act protections to their business-branded cards.
- As was the case in 2014, 70% of the largest U.S. card issuers offer general-purpose business credit cards. The exceptions are Discover – which is no longer accepting business credit card applicants – USAA, which does not have a business credit card, and Barclaycard US – which only issues co-branded business cards.