David Kirkpatrick

February 23, 2010

New credit card regulations go into effect

But they only cover consumer credit, so keep a watch on business and corporate credit cards because the Truth in Lending Act does not cover that plastic.

From the link:

A batch of new restrictions aimed at curbing the most egregious credit card practices kick in Monday, but business owners will need to stay alert — the new rules don’t cover cards used for corporate purposes.

The bill Congress passed in May reforms the Truth in Lending Act, which governs only consumer credit. The measure fulfills a wish list of long-sought reforms. Issuers won’t be able to hike the interest rates on existing balances as long as customers pay their bills on time, and they’ll need to notify customers at least 45 days in advance of interest rate increases and most fee changes.

Those two changes alone will save consumers an estimated $10 billion annually, nonprofit research firm Pew estimated in a recent report.

“Regulation” is often a dirty word to small business owners, but few would object to new laws offering them similar protection. With bank loans and credit lines drying up, credit cards are one of the only sources left for fast capital injections.

Nearly 60% of business owners polled recently by the National Small Business Association said they use plastic for their capital needs — and 79% said the terms of their credit cards have grown worse in the past five years.

“Regulation, particularly in the long-term, is good for the consumer. But these regulations won’t be there for the small business owner,” says Curtis Arnold, founder of CardRatings.com. “They’re going to have to be on their toes to protect themselves.”

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