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.¹ 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.

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. The high volume of offers for less-regulated business credit cards represents a risk to millions of American families, particularly since business card products require applicants to be personally liable for all charges under the business account. Policy makers should extend the consumer protections of the Credit CARD Act to any credit card that requires an individual to be personally or jointly liable for account expenses. At a minimum, applicants should receive warnings whenever a credit card is not protected by the Credit CARD Act.