Skip to main content
  1. News
  2. Business & Finance
  3. Personal Finance

Small business credit cards more difficult to obtain

In the Federal Reserve's April 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices, a special question indicated that banks continue to be reluctant to lend to small businesses, particularly via credit cards

According to the Federal Reserve's report, " A majority of respondents indicated that their standards for approving such business credit card accounts are currently tighter than the longer-run average level that prevailed before the crisis."

In other words, getting a small business credit card continues to be difficult for small businesses.  Additionally, the Federal Reserve reported that, "significant net fractions of respondents to these special questions indicated that their banks had tightened their terms on business credit card loans to small firms--for both new and existing accounts--over the past six months."

Although small business credit card lending has tightened, small business owners may actually benefit by applying for and using personal credit cards for small business expenses.  Small business credit cards are not covered by the CARD Act.  Thus, banks can raise rates on existing balances at will, a potentially devastating blow that can lead to interest rates of 29% or higher if a bank deems a small business to be risky.

However, by using a personal card for your small business, you are fully protected by the CARD Act, which means you're rate cannot be increased for existing balances, plus a number of other protections, including fee provisions.

While using a personal credit card may not be ideal for medium sized small businesses, small, owner operated businesses with a limited number of employees may be better off applying for a personal credit card offer.  Not only do small business owners stand a better chance of getting approved, but they can also get fairer term and more generous 0% APR deals.

For more information: For more information on credit card offers, please see the author's website, www.CardWisdom.com where you can compare credit cards and apply online for approval.

Comments

Advertisement

News

  • Israel, Hamas clash in Gaza
    Hamas claims to have captured an IDF soldier on the bloodiest day of the conflict
    Video
    Video
  • Missing bodies
    38 bodies have not been found from the MH17 debris field in eastern Ukraine
    World News
  • Peeping Toms in NSA?
    Has the NSA seen you naked? Edward Snowden says it's not unlikely
    NSA
  • Autism study
    The newest, largest study on autism suggests that it mostly has to do with genetics
    Science
  • McIlroy takes Open
    Rory McIlroy hangs onto the lead and wins the 2014 British Open
    Sports
  • $23 billion payout
    A jury sides with the widow of a smoker, tobacco company shells out $23 billion
    Headlines