Bizarre World of Business Credit Cards Trips Up Credit Expert

Recently, a $45.88 charge on one of my credit cards turned into a $96.77 charge in a matter of days, thanks to the unregulated world of small business credit cards. Here’s what happened:

A few months ago I opened a BP Business Fleet Card because I wanted to test out its usefulness for building business credit. As coauthor of Business Credit Success: Get on the Financing Fast Track, I know a thing or two about business credit ratings. Erik Salmon, a business credit consultant, tipped me off about this card and suggested I try it out.

The approval process was fairly easy and smooth. In fact, I was amused by how aggressively the folks at BP Business Solutions marketed the card. When I failed to complete the application the first time, they called me and encouraged me to send it in. I was approved quickly for a small credit line, and they proceeded to call me several times to encourage me to use the card.

I did, and in July received my second bill for a $45.88 fuel purchase. The bill was emailed to me on July 3^rd and payment was due on July 18^th—only fifteen days later. (Oddly enough, the bill is delivered as an email attachment, which I don’t find particularly secure.) Unfortunately, due to my daily deluge of email, I failed to open the attachment, and didn’t note the due date. By the time I remembered it was July 20^th.

Yes, “Ms. Credit Expert” was late on her second business credit card payment.

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I know I should know better. After all, I am the one who tells small business owners to pay their bills early, so there really is no excuse for my late payment. But c’mon, just over two weeks to get a payment in? At least if this were a personal credit card, I would have 21 days or more before my payment would be due, thanks the Credit CARD Act.

On July 20^th, I found myself trying to figure out how to minimize the damage and make the payment as quickly as possible. I called BP Business Solutions and discovered a phone payment would set me back $25, which seemed exorbitant to me. I thought about mailing the payment, but knew that could delay it by several more days.

I decided instead to muscle through their online payment system which, quite frankly, I find a bit bizarre. To use the system, the cardholder has to download a java application, but I couldn’t manage to install it successfully on either my desktop or laptop.

Remembering that the month before I had managed to make an online payment without downloading that app, I clicked around the site until I found the other option. (I later found a PDF on my computer they had sent me when I opened the account. It’s “user guide” to their online payment system. Really—you need a user guide to figure out how to manage your accounts online!)

I couldn’t remember my username or password, but unlike the other online payment accounts I use all the time, there was no online username/password recovery option. So I emailed their customer support department. To their credit, they responded right away, though I found it a little odd that the email came from “Keith Martin (aka Brian).”

I finally processed an online payment that was credited to my account two days later.

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.

[Related Article: Pew: “Business” Credit Cards Are Dangerous for Individuals]

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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