Bizarre World of Business Credit Cards Trips Up Credit Expert

The next month, my bill showed a “purchase” for $50.89. The date for that purchase was listed as a date I was on vacation and out of the state. Thinking my account had been compromised, I called and discovered that $50.89 purchase was actually a $50 late fee and 89 cents in finance charges for my previous month’s transgression. Of course, I hit the ceiling. The purchase amount was only $45.88 and I was only four days late. Should that really more than double my purchase? Isn’t fuel expensive enough already?

The next day, after I cooled down, I called customer service again, and Jason (no “aka”) kindly waived the $50 fee. He told me to pay the bill, and said a credit for $50 will appear on my next statement. I sent out the payment immediately, not wanting to deal with the online system again, and not wanting to get hit with another late fee.

Legislation has been proposed that would offer Credit CARD Act protections for small business credit cards. Had this card been regulated under that Act, my experience would have been dramatically different:

My due date would be at least 21 days after the date the statement was mailed or delivered.
Under the Truth-In-Lending Act, payments would be credited the day they were received, and under the CARD Act, the payment cut-off time would not be earlier than 5 p.m. on the due date.
The first time I was late, the late fee would have been capped at $25.
Additionally, they wouldn’t be able to charge a fee for making a payment by phone unless it involved an expedited payment with the assistance of a live customer service representative.

Regulation probably wouldn’t fix the confusing online account management and payment system, but who knows? Maybe it would force a systems upgrade.

I have no doubt that critics will point out that it’s my own fault I was late, and they will have a valid point. At the same time, I know about this stuff, for heaven sake’s, and I was only using this card for very limited purposes. I can see how this kind of problem could quickly escalate for a small business scrambling to survive in this tough economy. Is it really fair to leave them high and dry?

Credit.com’s credit card guru Beverly Harzog empathizes with me. She told me, “This experience just shows how essential it is for business credit cards to be covered under the Credit CARD Act. A limited grace period and a $50 late fee are both unacceptable.”

Salmon agrees. He’s helped hundreds of entrepreneurs build business credit, and his view is that “If the credit card companies report any information to personal credit reports (for a business credit card), even if it’s just collections on a personally guaranteed account, then that should automatically include that credit product under consumer regulations.” He has a point. Why should business have it both ways: be able to trash a business owner’s personal credit, but not have to abide by the rules governing personal cards?

What do you think? Should small business cards be covered by the CARD Act? Or am I just a whiner? Weigh in!

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