Business Credit Cards Could Jeopardize Your Personal Credit Rating: Study


Penalty Interest Rate:

Business Cards: Card holders can be hit with penalty interest rates any time for an indefinite period of time.

Cards Protected by Card: Penalty interest rates may not be applied to existing accounts unless 60 days past due.

The Winner: Cards Protected by CARD

Penalty Fees:

Business Cards: Unrestricted penalty fees. 73 percent of business cards included a late fee and 67 percent of business cards included an over-limit fee.

Cards Protected by CARD ACT: Consumers must opt in to over limit fees, and penalties are required to be "reasonable and proportional." The CARD act makes it unlawful to charge a penalty that exceeds the cost of a violation. For example, an over-limit fee for purchasing cup of $3 cup of Joe cannot exceed $3.

Application of Payments:

Business Cards: Credit card companies can direct payments to low-rate balances while interest rates accrue on higher rate balances.

Cards Protected by CARD ACT: Issuers are required to apply any balance above the minimum payment to the highest-rate balance first to reduce interest charges to cardholders.

The Winner: Cards Protected by CARD

Price Data:

Business Credit Cards: The lowest annual percentage rate advertised is 13.24 percent and the highest is 18.12. Some 41 percent of cards have an annual fee, but half offer a one-year promotional fee waiver. The median price tag for annual fees is $67.

Cards Protected by CARD ACT: The lowest advertised rate is 12.99 and the highest advertised rate is 20.99. Fourteen percent of cards have an annual fee. The median price tag of annual fees is $59. The Winner: Draw

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