Creditnet News Story
Rates for small business credit cards climb higher
Tuesday, September 7, 2010
By Danielle Robson
The Credit Card Accountability, Responsibility and Disclosure Act may have extended numerous protections to consumers, but the same isn't true for small businesses, and lenders have acted to exploit that loophole.
According to a new report from Billshrink, credit card interest rates for small business accounts have increased 30 percent since the start of the year, as lenders step up efforts to recoup profits lost to restrictions from the Credit CARD Act. These companies acted similarly before the laws protecting consumers were enacted, as average rates increased 16 percent on standard credit cards.
Despite this change, small businesses are still paying their bills on time more often than consumers, the report relays. In addition, only 27 percent of these accounts carry a balance from one month to the next, as opposed to 40 percent from individuals.
U.S. senator Charles Schumer of New York recently asked the Federal Reserve Bank to extend the protections the Credit CARD Act offers consumers to small businesses as well, saying that he feels they are now being unfairly targeted by lenders.
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