When Rep. Nita Lowey, D-N.Y., introduced the Small Business Credit Card Act of 2013 to Congress back...

1. Top 5 Differences Between Small Business and Personal
Credit Cards
When Rep. Nita Lowey, D-N.Y., introduced the Small Business Credit Card Act of 2013 to Congress
back in June, she was attempting to right a wrong that has persisted since the original CARD Act
took effect in October 2010.
The landmark law, which has increased transparency and bolstered consumer rights throughout the
credit card industry, does not apply to credit cards branded for small business use. And while
Lowey's bill has the potential to correct this oversight, it has only a 1 percent chance of being
enacted, according to GovTrack.
The roughly 37 percent of small business owners who leverage credit card debt each year must
therefore learn how to get by without important legislatively provided rights if they wish to achieve
debt stability and avoid losing money. CardHub conducted a study analyzing the small business
credit card policies employed by the nation's 10 largest issuers, and the five major takeaways are
listed below.
One of the most important protections afforded to consumers by the CARD Act is that which
prevents increased interest rates from being applied to existing balances unless an account holder is
at least 60 days delinquent on payment. Issuers can still use bait-and-switch pricing with business
credit cards, however -- a fact that makes debt stability impossible to achieve. Without debt stability,
small business owners cannot plan strategically or confidently allocate funds. Bank of America is the
only major issuer that has extended the CARD Act policy against arbitrary interest rate increases to
its business-branded cards.
Despite the obvious regulatory imbalance, small business
credit cards are inherently personal. If you submit a
business credit card application for your company, the
issuing bank will review your personal credit standing.
Then, if you're approved, account management will be
reflected on your personal credit reports and you'll be
personally liable for account balances.
The CARD Act requires banks to give customers at least
45 days notice before making key changes to their
accounts, such as altering its fee or interest rate structure. While they don't have to provide small
business owners with the same type of warning, four of the eight largest issuers in the country have
proactively adopted this policy for all of their customers.
With a general consumer credit card, issuers must allocate the amount of your monthly payment
above the minimum required to your most expensive debt. With a small business credit card,
however, they can allocate payments as they please. That means if you transfer a balance to a
business card that you also use for everyday spending, the balance with the highest interest rate will
stick around longest, leading to more expensive finance charges. Only American Express, Bank of

2. America, and Capital One have extended CARD Act payment allocation guidelines to their business
credit cards.
When it comes to expense categories like telecommunications services and office supplies, business
credit cards offer by far the highest rewards earnings rates. They also provide helpful expense
management tools and the ability to have numerous co-signers with customized spending limits.
What should you take from all of this? Well, general-consumer credit cards have an obvious
advantage in terms of user protections, and they do not increase a small business owner's personal
liability. But small business credit cards also offer certain advantages tied to everyday spending. You
should find a way to include both in your business repertoire as a result.
The best strategy would be to open a business rewards credit card for everyday use as well as a 0
percent general consumer card for funding small business operations. This will give you the best of
both worlds until Congress wakes up and starts passing new legislation, rather than filibustering and
campaigning their terms away.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.
Odysseas Papadimitriou is CEO of the credit card comparison website CardHub and the new
personal finance social network WalletHub.
http://abcnews.go.com/Business/top-differences-small-business-personal-credit-cards/story?id=2001
7386