Today, I received an email with a link to an article suggesting that the new credit card rules in the CARD act may not apply to business credit cards.    As most people know, a business card really isn’t any different than a personal card.   I often get both cards when there is a really good sign up bonus.

Does CARD Apply To Business Cards?

According to the Clark Howard article, no.   Howard states that “the proposed Credit Cardholders Bill of Rights would leave business credit cards unprotected under its provisions.  You’d still be subjected to sudden interest rate hikes, retroactive rate increases, shorter billing cycles and more on your business card — all the things that normal consumers may soon not have to deal with any longer.”

If true, this is the first I have heard of this rather large loophole.    I was skeptical at first, but then I found this article in BusinessWeek magazine making the same point.     Neither article has any credible comments contradicting the assertion that business cards are exempt from the CARD act.

If true, there are several interesting implications.    First, there is no reason why most business card users can’t just get a different non-business credit card for their business expenses.     That appears to be the whole point of a business card.    Second, even if this is true, it would not  surprise me if banks complied with CARD act rules for business cards, rather than offer the same cards with old and new rules.

On the other hand, if business cards get to play by the old rules, a couple things could happen.   First, it is likely that people will just switch to running their business expenses through their personal cards.   It would also make for an interesting experiment to see how the rates and terms of a business card differ from personal cards.   During the debate on the CARD act, banks argued that they would have to raise interest rates and fees to make up for the lost profits as a result of  the CARD act.  If that were true, then in theory, business cards operating under the old rules would offer better rates and fewer fees.

I doubt that will happen.   Banks will likely match terms of their personal cards, unless they want to see almost all of their business cards disappear.

Band Of America Says No To Future Rate Increases

The USA Today has an article about BofA pledge not to raise it’s rates any more.    The author of the article interprets this move as a transparent ploy to stall proposals to move up the implementation date of the CARD act.

Credit card companies have been taking a lot of heat from consumers and politicians for across the  boards rate hikes in anticipation of the CARD act.     It remains to be seen if other banks will follow BofA’s lead.