Will Credit Card Reform Abandon Small Business Owners?

Congress is scheduled to vote on the Credit Cardholders Bill of Rights Thursday, which would protect cardholders from some aggressive practices like two-cycle billing, applying payments in a way that maximizes interest charges, and others (more detail here from the blog Credit Slips.) But will the bill help small business owners?

The bill is an amendment to the Truth In Lending Act, a consumer protection law that doesn’t apply to business-to-business transactions. So like the Fed rules passed last year to limit credit card abuses, the Credit Cardholders Bill of Rights wouldn’t apply to the growing number of small business credit cards out there that function essentially the same way as personal cards.

These small business branded cards are personally guaranteed and based on the owner’s personal credit score. “In every way it looks like a personal card,” says Todd McCracken, president of the National Small Business Association. And with traditional sources of credit harder to get, small business owners increasingly rely on credit cards.

Reps. Nita Lowey (D-NY) and Neil Abercrombie (D-Hawaii) are offering an amendment to expand the protections to small business cards that’s scheduled to be voted on in committee this afternoon. The NSBA has more here.

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