It has been about a month since President Obama signed new credit-card reform laws. The goal of the new reforms is to protect individual cardholders from long-term practices in the industry such as changing terms on short notice and unexpected jumps in interest rates. However, the popular business credit cards that many small businesses have relied on for years will not be subject to the same change.
Card companies are combating the new law, which won’t go into effect until February 2010, by increasing rates on current business cardholders. Small business cardholders are upset about the sudden increases, but they aren’t being left with many options; they can choose to close their accounts within a month of the announced increase to avoid the hit.
Paul Hartwick, a spokesman for Chase, is claiming the recent increases in small business credit cards is not due to the new law, but is instead based on, “borrower risk, market conditions, and the costs to us of making the loans…”
Congress attempted to include small businesses with fewer than 50 employees in the new law, but the effort failed. There is a glimmer of hope, however, as the law ordered the Federal Reserve to monitor the use of small business credit cards and present their findings to Congress sometime next year.
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