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.
Professional cards not really guarded by Card Act
The primary target for professional credit cards used to be business owners and business types. However charge card broadened their efforts to include virtually anybody, 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 started receiving applications for business cards with none of the safeguards mandated in modern charge card guidelines. Within the first quarter, professional charge card offers increased 256 percent from the exact same period the year before to 47 million, according to the research firm Synovate.
The professional credit card scam
Customers applying for a corporate card need to familiarize themselves with the fine print. According to Credit Loan, credit card businesses will always apply payments to the account with the lowest rate of interest. This means the higher interest balance is compounding interest until the lower interest balance is paid off. Professional credit cards don’t have to allow 21 days between the date a statement is mailed and the date payment is due, making late payments, and overdue penalties, more likely. . Additionally, credit card corporations can change terms on a whim, and card holders won’t notice that their interest rate, transaction fees, annual fees and penalty fees have increased unless they bother to read the fine print on their statement.
Closing the professional card loophole
There’s a reason professional cards escaped regulation, says MSNBC’s Bob Sullivan. His argument is that when Congress legislates on behalf of customers, small business gets the short end of the stick. Sullivan deals the example of credit card fraud, and the way small businesses are stuck with the consequences . Most cardholders do not realize that their liability safety from charge card fraud comes at the expense of the business that makes the transaction with the lost or stolen card. Now that a different set of rules for professional cards is being exploited by credit card corporations to bait customers, Sullivan suggests that increasing the exact same protections within the Card Art to companies would benefit everybody.
Additional reading
Wall Street Journal
wsj.com
Credit Loan
creditloan.com
MSNBC
redtape.msnbc.com
