Which Business Credit Cards Rank Best for Small Business?

By Karen Axelton

The CARD Act added lots of protections to consumer credit cards—but it didn’t extend to business credit cards. Have any business credit card issuers taken steps to extend some of the same protections to their business customers? That’s one of the things CardHub sought to find out in the latest CardHub Small Business Credit Card Study.

CardHub looked at the business credit card practices of the nation’s 10 largest credit card companies to “determine which of these issuers, if any, have proactively extended CARD Act protections to their business credit cards, and to evaluate their level of transparency regarding business credit card practices,” the company says in its report.

CardHub focused on the protections most likely to be the most useful to small business owners, and gave a percentage weight to each protection as follows:

• An increased interest rate/penalty APR cannot be applied to an existing balance unless the cardholder is at least 60 days delinquent: 40 percent
• No double cycle billing: 15 percent
• No universal default: 15 percent
• Issuer must provide 45 days notice before changing terms of card agreement: 15 percent
• The amount of a payment that is above the minimum must be applied to the balance with the highest interest rate: 15 percent

Issuers’ highest possible score was 100. Each issuer was also rated based on the “transparency” of its business credit card policy. Issuers that were completely forthright about their practices were rated “Good;” those that provided some, but vague, information were rated “Mediocre;” and those that declined to respond to questions about their policies were rated “Bad.”

The winner by far? Bank of America, which offers its business credit card holders CARD Act protections including no double-cycle billing, universal default, favorable payment allocation and 45 days notice before making account changes. Bank of America also waits until accounts are at least 60 days overdue before raising interest rates.

While several other companies besides Bank of America rated “Good” in terms of transparency, many of those ranked poorly in terms of their actual policies.

“The longer industry leaders wait [to extend CARD Act protections to business credit card users],” say the authors of the study, “the more likely it is that their customers will rely on personal credit cards for business spending. Not only will this cost their business credit card divisions money, but the banks themselves will also be privy to less useful underwriting information as a result.”

You can see the top 10 ranking and read detailed breakdowns of the areas where each credit card issuer did well and poorly at the CardHub site.

Image by Flickr user demosphere (Creative Commons)

This entry was posted on Tuesday, May 17th, 2011 at 6:00 am and is filed under Accounting and Taxes, Capital Access, Small Business. You can follow any responses to this entry through the RSS 2.0 feed.


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