Posts Tagged ‘CARD Act’

Let’s Fix the CARD Act

Monday, June 14th, 2010
Reading the Fine Print

Reading the Fine Print

In May of last year, President Obama signed into law the CARD Act, which restricts some of the more abusive practices of credit card accounts, such as retroactive rate increases on outstanding balances. Unfortunately, despite the heroic efforts of Senators Landrieu and Snowe, the protections are limited to individual consumers and do not extend to small businesses. The bank lobby argued against extending protections to small businesses, claiming that such action may limit the availability of capital for revolving loans on credit card accounts and may result in higher interest rate charges. Of course, small businesses are already experiencing lack of access to credit and high charges, so if you accept the banks’ argument at face value, there was nothing to lose by extending the CARD Act to include small businesses.

As a concession of sorts, the Senate, in quashing the attempt to include small businesses in the CARD legislation, directed the Federal Reserve Bank to conduct a study of credit card use by small businesses. The Fed has just released the study, smallbusinesscredit click to download it. The Fed’s report does confirm the positions taken by small business advocacy groups as to the extensive use of credit cards by small business owners for working capital needs. It also highlights the benefits of improved disclosure requirements. However, it stops short of offering specific recommendations to protect small business credit card accounts from deceptive practices by the issuing banks. The good news is that the Small Business Credit Card Act of 2009 (H.R. 3457) is working its way through Congress. Add your voice to the fifteen national business and consumer organizations that have endorsed this legislation. Write to your senator and congressman and urge his support of this legislation at a critical time when small businesses need transparent terms on their credit card accounts.

Bank of America Includes Small Business Customers in CARD Protections

Friday, April 30th, 2010

In an earlier blog posting, I criticized CARD (Credit Card Accountability, Responsibility and Disclosure Act) legislation for excluding small businesses from the protections it affords to individual consumers. Those protections include banning the practice of retroactively raising rates on old balances. Now one major bank has decided to do what Congress did not. Bank of America has announced that it will extend the CARD Act protections to its two million small business customers. Specifically, BofA will provide at least 45 days’ advance notice of future interest rate changes, a minimum 25-day grace period between the end of the billing cycle and the payment due date and a one-page summary of the terms and conditions of the credit account, to bring transparency to rates, payment information and fees. In addition, BofA will apply payments made on small business card accounts to the portion of their balance with the highest interest rate. I am heartened to read this news and frankly wonder what took a major bank so long to take this initiative. Surreptitiously sneaking in fee hikes and reassessing past interest rates was no way to build market share and goodwill among customers. Now let’s see if the other banks follow suit.