Business Credit Cards Place U.S. Households at Risk

Since passage of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, most credit cards have become safer and more transparent. Practices deemed “unfair or deceptive” by federal regulators are now prohibited on consumer credit cards marketed primarily for personal, family or household transactions. However, Credit CARD Act protections do not apply if a card is labeled for business or commercial use, regardless of whether the account holder is a large corporation, a small business owner, an employee or an ordinary consumer. Thus, while consumer credit cards in general no longer include unpredictable pricing structures and hair-trigger penalty interest rates, these and other potentially harmful practices remain common on business credit cards that millions of individuals use.

For this report, Pew analyzed business credit card application disclosures and household direct mail data in an effort to determine Americans’ exposure to potentially harmful practices. This analysis shows that American households receive more than 10 million offers every month for business credit cards, and the majority of these cards have potentially harmful terms that would not be legal on those labeled for consumer use. Since business card products require applicants to be personally liable for all charges under the business account, the high volume of offers for less-regulated credit cards represents a risk to millions of American families.

Nick Bourke, manager of the Pew Safe Credit Cards Project, discusses the brief, U.S. Households at Risk from Business Credit Cards.

Pew is no longer active in this line of work, but for more information visit the Safe Credit Cards Project on PewHealth.org.