The dangers of business cards

"Landep News"

The dangers of business cards

A new marketing strategy of credit car companies has resulted in an invasion of American house holds with more than 10 million offers related to business cards every month.

It might not have seem like big news in the past, but the Credit Card Accountability, Responsibility and Disclosure Act made a difference when it was passed in 2009. This law is meant to fight against the abusive practices of many credit card companies, but it’s focused only on consumer credit cards. Therefore, the marketing of business, less-regulated credit cards that allow companies to return to their old practices has begun. As a result, some US senators including Sen. Bob Mendez have decided to notify the Federal Reserve and ask it to apply the CARD Act restrictions to business cards as well because it has the necessary authority. If the Federal Reserve refuses to do so, the senators will seek the help of a newly created authority, the Consumer Financial Protection Bureau.

Consumers should understand that by trusting in these business cards they expose themselves to risks which consumer cards don’t involve. The credit card companies need boundaries, because otherwise consumers are likely to face “hair-trigger penalty interest rates”, as the Pew Charitable Trust was able to declare after completing its study related to credit card practices. The same concern was expressed by the senators in the letter they addressed to the Fed Chairman: “consumers may not realize they do not offer the same protections as personal cards”. The letter also included a few solutions proposed by the senators that were mainly focused on the need to properly inform consumers about the features of these credit cards.

For an outsider it seems that these business cards are the solutions found by credit card companies to avoid the protections of the CARD Act and maximize profits. Although Pew said that the study which involved the 12 most popular card issuers in the US didn’t reveal such a behavior, Sen. Mendez chose to strongly disagree: “Why would you suddenly start marketing business cards, going out at the rate of 10 million a month?”.

In the end, the reasons are less important. The main conclusion is that the Federal Reserve needs to react quickly and make sure consumers are protected by the CARD Act in all possible situations. Your financial well-being is of the essence, isn’t it?

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