It’s a common saying that you can’t judge a book by its cover, and it turns out that this applies to business credit cards as well. Despite what you might expect, the differences between consumer and business credit cards aren’t that significant. A recent study by Card Hub revealed that the main difference is that with business cards, both the company and the individual cardholder are liable.
Interestingly, the protections offered by the CARD Act, which are standard for consumer credit cards, don’t automatically apply to business cards. This has created a clear ranking of business credit card issuers based on how they adopt these protections for business cards. Some issuers, like Capital One and American Express, are doing a good job by adding these safeguards, making them more transparent and user-friendly. Bank of America stands out even more by applying every major CARD Act protection, which helps small business owners manage their debts more consistently and track their expenses more effectively.
However, not all issuers are as proactive. Chase and Discover, although not perfect, have made some voluntary changes to align with the CARD Act. Citi, on the other hand, is barely making the cut with its level of transparency. Then there are those at the bottom of the list—Wells Fargo, HSBC, and U.S. Bank. These banks have not adopted significant CARD Act protections and lack transparency, indicating a possible reliance on less consumer-friendly practices.
The Federal Reserve and the new Consumer Financial Protection Agency have been clear about their commitment to regulating this space. Banks that don’t adopt proactive measures may face more stringent regulations in the future. This situation shows that these banks not only disadvantage their customers but also suggest deeper organizational issues that could impact their overall performance.
For small business owners looking for a credit card to carry a balance, the choices are relatively simple. They can opt for a Bank of America business credit card, which offers stability and transparency, or a general consumer card to avoid sudden increases in debt costs. When it comes to purchases that will be paid off each month, the choice between business and general-use cards isn’t as crucial; instead, focus on rewards and expense tracking features.
Starting your own business, like a blog, can also be a financially savvy move. This can help increase your income and reduce your taxable income, with minimal startup costs. Having a business can provide significant personal and financial freedom, as I’ve experienced since starting Financial Samurai in 2009.
