RICHMOND, VA (WWBT) – If you get an offer for a business credit card in the mail -- don't be so quick to sign up. Credit cards for businesses are not covered under the Credit Card Act of 2009.
This means, your rates could be legally increased or you could be slapped with huge penalties without any warning.
The 2009 Credit Card Act was meant to better protect consumers, by making the credit card process more transparent. But what applies to individuals, may not apply to companies.
Andrew Grasso, A Financial Specialist with Clear Point Credit Counseling Solutions says, "The thing about business cards is they actually fall under the old terms and conditions of credit cards so basically, they can change the conditions of that card or account or business card at any point in time."
He says consumers need to be cautious of business card offers. He pointed out some of the concerns he had with terms and conditions.
Grasso says, "Another one that is actually alarming is that you authorize us to allocate your credits and payments in a way that is most favorable to or convenient for us." The business card loophole means consumers need to know exactly what they're agreeing to, and read the fine print.
It is right here in black and white, it is actually one of the first things you see when you open the terms and conditions.
We asked him if he was surprised that people still don't read it?
Grasso says, "Well, I am never surprised by that, but you actually have to read your contract."
Financial experts say if you get one of these business cards, the best thing to do may be to just toss it out but if you are still interested, they say make sure you are able to handle the debt.
Grasso says, "I would say go over your whole financial situation. Do you need another card? What do you need that card for, do you pay off your balances in full every month?"
He says some of the business card offers can be quite attractive, offering a number of perks -- and you don't have to run a business to get an offer. Grasso adds, not all companies are out to get you, in fact, some business cards actually follow the Card Act Rules. Bottom line, make sure you know what you are signing up for.
Parents should also be mindful that their college students may be targeted for these business cards. Under the Credit Card Act, only people 21 and over can sign up for credit cards. The rules don't apply to business credit cards -- they can be sent to anyone 18 and over.