How Small Business Owners Can Achieve Debt Stability Without CARD Act Protections

Small business owners are basically living in the dark ages.  No, I’m not referring to the aversion many mom and pop stores seemingly have to the power of web-based marketing or even how tough it is to become successful in the currently gloomy economic climate.  Rather, I’m talking about the fact that politicians and financial regulators don’t seem to think that small business owners are worthy of the same rights and protections as the general consumer population.

While the CARD Act of 2009 has proven to be a huge success – adding transparency and fairness to the personal finance industry – it doesn’t apply to credit cards branded for business use.  That’s alright, you might be thinking; small business credit cards are just different, right?

Not quite.  Sure, they offer rewards tailored to business spending habits, enable owners to earn those rewards when employees make purchases, and provide enhanced expense tracking features.  But approval for a small business card still depends on your personal credit standing and banks still report usage information to your personal credit reports. Perhaps even more troubling for those who were previously unaware, major credit card issuers also hold small business owners personally liable for business credit card debt.

In other words, there is no real rationale to explain why issuers can still arbitrarily increase interest rates on existing balances and engage in other shady tactics.  But since they can, small business owners are unable to achieve debt stability with a business credit card, unless Bank of America issues it (BofA is the only issuer that has extended the CARD Act to its business products).

What savvy small business owners can do, however, is simply use general-consumer credit cards for balance transfers as well as to finance any big-ticket purchases they won’t be able to pay off in full within the month.  The personal liability is going to be there regardless, after all.

Not only will that allow you to rest assured knowing that your credit card company can’t suddenly increase the cost of your existing debt, but it also enables you to get the best possible 0% deals on the market.  There aren’t any business credit cards that stack up against the following general-consumer offers, after all.

• Slate Card from Chase:  This is what’s known as a free balance transfer credit card, since it offers a 0% introductory period (that lasts 15 months) and charges neither an annual fee nor a balance transfer fee.

• Citi Diamond Preferred Card:  At 18 months, this card offers the longest 0% introductory term on the market.  The fact that it doesn’t charge an annual fee either means that you won’t waste any money on fixed costs when paying off big-ticket company purchases over time.

When you couple either or both of these cards with one of the best business rewards cards on the market, well, you’ve got yourself a nice little credit card arsenal.

This alternative route to small business spending will work for now, but hopefully it won’t have to do for too much longer.  After all, banks are extending additional CARD Act protections to their business credit cards each year, according to CardHub studies, and Congress is considering a bill called the Small Business Credit Card Act of 2013.

We’ll just have to see if they pass it or toss it in the trash pile along with what seems like every other piece of legislation introduced recently.

Odysseas Papadimitriou is CEO of CardHub.com, a website that helps people compare all types of credit card offers, including credit cards for small business and credit cards with 0% interest.