More finance reform may be on horizon in the form of tighter guidance for credit cards issued to small businesses.
And though it still remains a long shot for this year, area small-business owners and experts say such reform legislation is necessary and already overdue.
Some eights months after the consumer credit-card reform legislation, or CARD Act, went into effect nationally, the National Small Business Association continues to lobby for legislation that would place business and professional credit cards under the same guidelines as are now in place for consumer cards.
The CARD Act was designed to foster greater transparency through clear disclosure of contract terms and better billing and marketing practices. For example, it does not allow credit card issuers to charge consumers an inactivity fee, multiple penalty fees for the same transaction, or a late fee of more than $25 unless one of the cardholder’s last six payments was late (and then it can only go up to $35). The act also requires credit card issuers to explain any increase in their card’s annual percentage rate and to re-evaluate the increase every six months for a possible reduction in rate.
However, these guidelines were not extended to business credit cards, resulting, some observers contend, in a shifting of the burden to small businesses in the form of higher interest rates and onerous credit-card terms.
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