Three Things Small Businesses Should Know About The CARD Act

Credit Card
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The Credit CARD (Credit Card, Accountability, Responsibility, and Disclosure) Act of 2009 was signed into law on May 22, 2009 and several of the provisions went into effect on February 22nd, 2010. The law’s intent is to help protect consumers from what the Federal Reserve termed “unfair or deceptive” rate and billing practices.

Credit cards are often part of an overall debt strategy for small business owners so we’ve taken a look at what the CARD Act means for your small business.

If you want to read more on the Act, read the White House press release or visit a great summary on

  1. Business and Corporate Cards get left out in the cold. The most important thing a small business owner needs to know about the Credit CARD Act is that it doesn’t cover business and corporate credit cards. That in and of itself isn’t great news, however, the more troubling possibility is that small business card holders may now be used by the credit card companies to make up for the decline in fee and rate revenue from consumers.  Read those card member notices carefully.
  2. Watch out for increased merchant fees. One strategy that some experts anticipate credit card issuers will use to make up for lost consumer revenue is to increase the fees charged to merchants that accept credit cards. In fact, a recent report by the US Government Account Office indicates that fees are already on the rise for some card types and issuers.
  3. Think twice before using a personal credit card. To take advantage of the increased level of consumer protection the seemingly obvious thing to do is begin using a personal credit card for your business expenses.  Before putting that next business expense on your personal card, consider these two things:
  • Using a personal credit card may affect your ability to claim purchases as legitimate business expenses. Consult with your tax advisor on the best way to handle this issue.
  • Additional debt on a personal credit card will likely have a negative effect on your personal credit score.

So what’s a small business owner to do?

First, if you haven’t already done so, figure out a financing strategy for your business that includes a diversified portfolio of financing options. Not all financing options are created equal.  Where a short term loan may be appropriate in some cases, equipment leasing and business cash advance also have their appropriate uses.

Second, do your research. There are many  small business financing options if you know where to look.

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