Has your credit card company raised your rates, cut your limit, or both? If so, you’re not alone. Nearly two thirds of small business owners reported seeing their rates go up in the last 12 months, and 41% said they had their credit limits reduced, according to a survey out today from the National Small Business Association. The survey queried 288 NSBA members.
Why the jump in rates when overall interest rates are so low? One theory is that banks are trying to shore up their balance sheets, with lenders like Chase cutting traditional lines of credit to small business owners.
As we’ve noted before, credit cards have replaced business loans for many small companies. Most business owners aren’t using credit cards for convenience and paying off the balance each month. Instead, they’re using credit card debt to fund operations and investments: 60% of business owners surveyed reported carrying a monthly balance, with 37% carrying $10,000 or more. For one in three businesses, credit card debt accounted for at least 25% of the company’s overall debt.
Legislation is in the works to limit some of the most aggressive tactics of credit card companies, but the bill doesn’t cover small business credit cards. Check out this story in the Denver Business Journal for a good run down of the credit card bill debate. And we recently surveyed top small business card issuers about rates. Here’s a look at what they said.
If you’ve got a story about your rates rising or your limit being cut, let us know in comments below or on Twitter.