Since the Credit Card Accountability, Responsibility and Disclosure Act, or CARD, Act has come into force in 2009 in the US, credit card users have received much more protection. For example, it is now illegal for banks to retroactively charge interest rates or to charge fees for users overstepping their credit limit. However, the CARD Act 2009 does not apply in all situations and users of credit cards need to be aware of ongoing pitfalls. In other countries the law applying to credit cards may have similar loopholes and customers are therefore advised to thoroughly check the terms and conditions applying to their credit cards.
The CARD Act 2009 and business credit cards
Despite its success with respect to consumer protection the CARD Act does not apply to business credit cards. Users of business credit cards still have to be vigilant to avoid dubious practices by banks.
Banks have vigorously promoted the use of business credit cards since the Card Act 2009 has come into force, leaving more customers exposed to practices that are now banned under The Card Act 2009 for private credit cards. Taking out a business credit card may still be an attractive and useful option for small businesses, but it is important to check the terms and conditions that apply to the card in detail. In addition, consumers need to make sure they understand all of the stipulations in the terms and conditions and should they not, to ask for further clarification. Consumers are in a position of power at the start of commissioning a service from a bank and this is the time to ask for thorough clarification and advice.
Check the small print before signing up
Banks will put their best deal forward when competing for your custom. Many offers to gain new customers include 0% introductory deals, no balance transfer fees and low annual percentage rates (APR). When considering such an offer it is of paramount importance to check the small print. Quite often the attention grabbing figures are followed by a small sign linking to text deeply buried within the small print section which qualifies the rate.
Often the best rates are only available to certain types of customers excluding most of us from getting the best deals. Moreover, the best rates, even for those customers to whom they apply, will be temporary. It is important to be aware of what the interest rate will be after your temporary introductory offer ends. The 0% interest period is the ideal time for customers to pay off any debt they have accrued previously. Should this not be possible and consumers are subsequently faced with a high APR on the remaining balance an offer, that looked originally as if it would save money, in effect proves very costly. Furthermore, customers need to be clear about whether the bank will levy an annual fee and a balance transfer fee on commencement of service. Annual fees are often waived as part of an introductory offer but will add to the cost of your card in subsequent years.