|
For a minute there, we thought all those great protections for consumers in over their heads with credit cards were going to extend to small business credit card holders, too. But it was too good to be true. Now the best we can hope for is not to get fleeced as the credit card companies as they try to make up for lost revenue:
Congress is reining in the penalties that banks can levy on their riskiest borrowers. Card issuers stand to lose billions in revenue. They may seek to make it up from other plastic-wielding customers by raising interest rates, scaling back rewards and imposing annual fees. Small-business cardholders could be prime targets.
Let's hope not. The latest statistics show that the credit card companies did a good job of selling small businesses on using credit so there's lots of exposure for our small business bretheren:
Small businesses have been courted heavily by card issuers in recent years, and the number of small-business cards has grown dramatically, said David Robertson, publisher of the Nilson Report, an industry newsletter based in Carpinteria, Calif. Small-business credit cards now account for 11% of all Visa and MasterCard charges, up from 3% in 1998, he said.
And the actual numbers may be higher because some business owners use personal credit for business expenses ... although I suppose that means those credit balances would be covered by the new legislation.
The bankers feel like consumer credit and small business credit are totally different animals and should be treated as such. Here's the way they see it:
"Business accounts are not nor should they be" covered, said Peter E. Garuccio, a spokesman for the trade group. "They should be like any other open-end business loan that adjusts to market conditions. The amounts are higher, the risks greater, and presumably someone who is in business is more sophisticated than the average consumer."
Hmmm ...
Read a great article in the LA Times on this subject: http://www.latimes.com/business/la-fi-smallbiz26-2009may26,0,3804518.story
Credit Card Reform Leaves Out Small Businesses
|
