When the CARD Act passed, some skeptical observers complained that it had a big loophole. The CARD Act only covered personal cards. Business cards, also known as professional cards were deemed exempt. At the time, I speculated that credit card companies would be unlikely to have two different sets of rules for business and personal cards. Apparently, I gave the banks too much credit.
Some Business Cards Go By The Old Rules
According to this article in the Wall Street Journal, some banks are choosing to exploit the business card loophole. The article cites CitiBank as applying payments to the lower interest rate balances first, and for raising interests rates sharply in the event of a missed payments. Both actions would be prohibited if the card was a personal card, not a business card. The article does give Capitol One recognition for applying the CARD Act rules to it’s business cards.
What Is The Deal With Business Cards?
Frankly, I have always wondered why these cards exist. They are a great tool for someone like me who wants to receive multiple sign up bonuses. When a really killer deal is out there, I have been known to sign up for both the personal and the business cards. As for legitimate uses, my belief has always been that a business card can allow you to segregate your business expenses from your personal expenses. I have operated a number of small ventures, but I never had any trouble distinguishing my business expenses from my personal ones. If my business grew, I could see how it would be nice to have a different card, although I am not sure why it would have to be a business card, rather than a different personal card.
Some business cards offer the feature of having multiple additional cards for employees with the rewards accruing for the primary cardholder. I would hate it if my job asked me to charge a bunch of stuff to a company card where I didn’t see any rewards. Hypocritically, I would be the first to have such a card if I had people under me who needed to purchases for my business.
For now, I would still consider getting a business card for the sign up bonus, but as always, I don’t imagine really using it much.
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