New charge card guidelines mandated by the Credit card Accountability and Responsibility and Disclosure Act of 2009 enacted robust customer safeguards. But the Card Act was written to give financial institutions a loophole via the rules with “professional cards”. Professional card holders are operating without a net. Customer protections within the form of limited late fees and transparent interest rate policies are non-existent with these cards. Credit card companies faced with the loss of billions in ill-gotten gains are aggressively pitching professional cards, otherwise known as small company cards or corporate cards, to consumers who have no practical utilize for them.
Consumer safeguards not extended to professional cards
Professional credit cards used to be reserved for small business owners or business executives. But credit card corporations broadened their efforts to contain virtually anyone, the Wall Street Journal reports, following the March 2009 passage of the Card Act. Card companies figured out an easy dodge. Average Jane’s and Joes across the country began receiving applications for corporate cards with none of the protections mandated in new credit card rules. Synovate, a market research firm, reports that in the first quarter this year, 47 million applications for professional cards-a 256 percent increase from 2009-arrived in the mailboxes of unsuspecting consumers.
Deception is the rule for professional cards
Customers applying for a business card need to familiarize themselves with the fine print. To take as much of the customer’s money as possible, Credit Loan reports that card issuers will apply payments over the minimum to the balance with the lowest APR. Until the lower interest balances are paid off, the higher rate balances continue to accumulate interest. Allowing 21 days from when a statement is postmarked and also the payment is due isn’t required, which allows financial institutions to shorten the window to make it harder for cardholders to pay on time. Professional card rates of interest can also rise with no warning. Credit card corporations will utilize payments a mere one day late as an excuse for huge rate hikes. Finally, professional credit cards can change rates of interest, transaction fees, annual fees and penalty fees terms without any advance notice.
Keeping credit card business selfishness under control
There’s a reason professional cards escaped regulation, says MSNBC’s Bob Sullivan. His argument is that when Congress legislates on behalf of consumers, small business gets the short end of the stick. Sullivan offers the example of charge card fraud, and how smaller businesses are stuck with the consequences . Many credit cards protect customers from liability when it comes to fraud. Most of those cardholders are ignorant of the belief that the business honoring the lost or stolen card takes the hit. Sullivan said that if companies were granted the protections the Card Act provides to customers, everyone would be better off when credit card corporations cannot take advantage of the present loopholes.
Additional reading
Wall Street Journal
wsj.com
Credit Loan
creditloan.com
MSNBC
redtape.msnbc.com
