Small business credit carries different rules than consumer cards

Many consumers who own small businesses may have received a larger number of offers for new credit cards specifically for their company, but these should be approached with caution.

The protections from the Credit Card Accountability, Responsibility and Disclosure Act of 2009 that apply to consumer accounts do not cover business accounts, and some lenders may try to use that to their advantage, according to a report from Smart Money. For example, studies have found that the average small business credit card carries an interest rate of 1 or 2 percent higher than a consumer account.

However, some companies may find that perks extended for business cards – such as no limit on cash back rewards or no foreign transaction fees – make up for the higher interest rate, the report said.

“For us, there was no catch,” Joe Speiser, cofounder of a pet-food deliverer company, told the news site.

Lenders are sending out business credit card offers in far greater volume than those for consumer accounts because there is no law limiting the amount they can issue.