This will show you taking any of my predictions seriously can be risky!
On March 30, I blogged about the Credit Card Accountability, Responsibility and Disclosure Act that took effect on Feb. 22. Youíll recall I said: CARD puts restrictions on how banks raise card interest rates, impose late fees and account for payments made on card balances. But, I warned, CARD was for consumer cards only and did not include small-business cards in the protections.
Then, I made my prediction — that small business cardholders would become targets for beefed up fees, interest rates and other revenue-raising tactics to make up for revenues banks will lose from the new consumer cards law. Ooops!
Happily, I report I may have been wrong. On April 1, Bank of America ook the lead in announcing the most extensive application to small business cardholders of many of the new protections consumers now enjoy. It wasnít an ďApril FoolĒ announcement, either!† In BofAís case, it announced it will no longer charge fees for going over the cardís credit limit; will not increase interest rates on existing balances; will give at least 45 days notice of any rate changes on new balances; and give no less than 25 days between statement closings and payment due dates. If youíre among the more than 2 million BofA small business cardholders, you can expect a letter as early as next week explaining the details.
Notably, American Express and JP Morgan Chase had previously announced they were extending payment processing times as well as setting payment due dates the same each month, both helpful moves for small businessmen to be sure. However, BofA has now clearly gone a lot farther and raised the bar when it comes to small business cards. Itís likely other banks have already adopted some of these protections for their business cardholders as well, so watch for such notices coming your way. Overall, it will be interesting to see how this all plays out for business cardholders as the situation may become more competitive.
Itís important to remember, however, these changes for business cardholders are being made voluntarily by the banks. Perhaps one motivation is the fact that the National Small Business Association (NSBA) attempted to get business cards included in the CARD legislation, but failed.
Still, NSBA hasnít given up and is reportedly pushing for such protections. NSBA estimates 41 percent of small businesses used a credit card as a source of financing in 2009.
So, I now predict terms for your business card will get a lot better from here on. Of course, this prediction is probably about as good as my last one!?