Posted by: Alina Comoreanu

Small business owners aren’t people. Well, at least that’s how the current regulatory environment portrays them. Congress left the small business community out in the cold by excluding business-branded credit cards from coverage under the Credit CARD Act of 2009. And while that may not seem like a big deal at first, the CARD Act has done a great deal to make credit cards safer and less expensive for consumers in recent years.

Most importantly, small business owners still are subject to arbitrary increases in the cost of existing debt. Credit card companies must wait until a cardholder is at least 60 days delinquent to raise the interest rate on a consumer-card balance. But they can do so with a business-card balance whenever they wish. So the more than one-third of small business owners who use credit cards for financing purposes never really know how much their debt will cost. And that prevents them from confidently allocating capital, causing unknown damage to the economy.

“Credit card debt instability is a huge problem for smaller businesses,” said Molly Day, VP of public affairs for the National Small Business Association. “If entrepreneurial people can’t garner the capital to launch a business, we’ll see fewer start-ups, which means slower employment growth and less innovation.”

Fortunately, many major credit card companies have taken it upon themselves to extend certain CARD Act protections to their small business credit card offers. Below, you can see which issuers have adopted which protections. This should make it easier to find the best credit card for your company’s needs.

1. Main Findings
2. Issuer Policies & Scores
3. Historical Scores & Policy Changes
4. Methodology

Main Findings

 

Bank of America continues to be the most small-business-friendly credit card company, as it is the only major issuer to have extended all of the major CARD Act protections to its business-branded cards.

Half of the issuers still unfairly allocate payments, by not applying amounts above the minimum required to the balance with the highest interest rate.

 

Only 19% of issuers wait until a cardholder is 60+ days delinquent before raising rates on existing business credit card balances.

 

38% of issuers do not give 45 days’ notice to small business card holders before changing key account terms.

 

Bank of America, Barclaycard, Citi, Fifth Third, Navy Federal, PNC Bank and U.S. Bank are unique in not reporting business card activity to customers’ personal credit reports.

 

Issuer Policies & Scores

Issuer	Cardholder Personally Liable?	Usage information relayed to personal credit reports?	CARD Act Protections Score	Transparency	Notable Changes
American Express	Yes	Yes, when the account is cancelled and seriously delinquent	60%	Good	None
Bank of America	Yes	Not currently	100%	Good	None
Barclaycard US	Yes	No	85%	Good	None
Capital One	Yes	Yes	60%	Good	None
Chase	Yes	Yes, when the card holder is more than 60 days delinquent	60%	Good	Allocates payments above the minimum to balances with the highest APR first.
Citi	Yes	No, but business credit card payment history may impact ability to obtain approval for a Citi consumer credit card	45%	Good	None
Discover*	Yes	Yes, when the account is cancelled and seriously delinquent	30%	Good	None
USAA	N/A (does not offer a business credit card)	N/A	N/A	N/A	N/A
U.S. Bank	Yes	No	45%	Good	None
Wells Fargo	Yes	Yes, when the account is in default**	70%	Good	None
Fifth Third Bank	Yes	Not currently	60%	Good	No longer reports business card usage to customers’ personal credit
Synchrony Bank	Yes	Yes, when the account is cancelled and seriously delinquent	60%	Good	None
PNC Bank	Yes	No, information is reported to Business Bureau only	30%	Good	No longer reports business card usage to customers’ personal credit reports
First National Bank of Omaha	Yes	Yes, when the account is cancelled and seriously delinquent	60%	Good	Provides 45 days’ notice before changing terms of card agreement
TD Bank	Yes	Yes, when the account is cancelled and seriously delinquent	30%	Good	N/A
Navy Federal	Yes	Not currently	45%	Good	No longer reports business card usage to customers’ personal credit reports
State Employees'	N/A (does not offer a business credit card)	N/A	N/A	N/A	N/A
Pentagon Federal	N/A (does not offer a business credit card)	N/A	N/A	N/A	N/A
BECU	Yes	Yes, when the account is cancelled and seriously delinquent	30%	Good	N/A
SchoolsFirst F.C.U.	N/A (does not offer a business credit card)	N/A	N/A	N/A	N/A

*At this time, Discover is not actively promoting its business credit card. However, there are existing business cardholders, which is why Discover received a score in this report. **Wells Fargo reports business credit card account information to the Small Business Financial Exchange (SBFE) business credit bureau on a monthly basis. The company does not report ongoing monthly performance to cardholders’ personal credit reports, except for cases of default.

Historical Scores & Policy Changes *Some of the issuers were scored for the first time in 2016

 

Issuer	2011 Policy Changes	2012 Policy Changes	2013 Policy Changes	2014 Policy Changes	2015 Policy Changes	2016 Policy Changes	2017 Policy Changes
American Express	Adopted:- 45 day change-of-terms notice	Adopted:- No double cycle billing- No universal default- Fair payment allocation	Adopted:- Fair payment allocation	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes
Bank of America	Adopted:- No arbitrary interest rate changes on existing balances- No double cycle billing- No universal default- 45 day change-of-terms notice- Fair payment allocation	No Policy Changes	No Policy Changes	Adopted:- BofA no longer reports business card usage to customers’ personal credit reports	No Policy Changes	No Policy Changes	No Policy Changes
Barclaycard US	N/A	N/A	N/A	N/A	N/A	N/A	No Policy Changes
Capital One	Adopted:- No double cycle billing- No universal default- 45-day change-of-terms notice- Fair payment allocation	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes
Chase	No Policy Changes	Adopted:- No double cycle billing- No universal default- Began reporting business credit card usage information to customers’ personal credit reports after 60-day delinquency.	Adopted:- 45-day change-of-terms notice	No Policy Changes	No Policy Changes	No Policy Changes	Adopted:- Fair payment allocation
Citibank	Adopted:- No double cycle billing- No universal default	Adopted:- Citi stopped reporting business credit card usage information to personal credit reports for its since-discontinued professional card.	No Policy Changes	No Policy Changes	Adopted:- 45-day change-of-terms notice	No Policy Changes	No Policy Changes
Discover	No Policy Changes	Adopted:- No double cycle billing- No universal default	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes
USAA	N/A (does not offer a business credit card)	N/A (does not offer a business credit card)	N/A (does not offer a business credit card)	N/A (does not offer a business credit card)	N/A (does not offer a business credit card)	N/A (does not offer a business credit card)	N/A (does not offer a business credit card)
U.S. Bank	Did not participate in the study	Did not participate in the study	Adopted:- No double cycle billing- No universal default	No Policy Changes	No Policy Changes	Adopted:- No longer reports business card usage to customers’ personal credit reports	No Policy Changes
Wells Fargo*	Did not participate in the study	Adopted:- No double cycle billing- No universal default	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes	No Policy Changes
Fifth Third Bank	N/A	N/A	N/A	N/A	N/A	N/A	Adopted: -No longer reports business card usage to customers’ personal credit reports- 45 day change-of-terms notice- Fair payment allocation
Synchrony Bank	N/A	N/A	N/A	N/A	N/A	N/A	N/A
PNC Bank	N/A	N/A	N/A	N/A	N/A	N/A	Adopted:- No longer reports business card usage to customers’ personal credit reports
First National Bank of Omaha	N/A	N/A	N/A	N/A	N/A	N/A	Adopted:- 45 day change-of-terms notice
TD Bank	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Navy Federal	N/A	N/A	N/A	N/A	N/A	N/A	Adopted:- No longer reports business card usage to customers’ personal credit reports
State Employees'	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Pentagon Federal	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Boeing Employees	N/A	N/A	N/A	N/A	N/A	N/A	N/A
SchoolsFirst F.C.U.	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Previous Reports	2011	2012	2013	N/A	N/A	N/A	N/A

*Wells Fargo offers an extensive rewards program to all business credit card customers, and starting in 2017, there’s no annual rewards program fee for new Wells Fargo’s Business Platinum and Business Secured Credit Card customers

Methodology

WalletHub investigated the business credit card policies of 20 large issuers – 15 banks and 5 credit unions – to determine whether they have proactively extended important CARD Act protections (which apply by law to personal credit cards) to their small business counterparts. We scored each issuer based on its adoption of five crucial CARD Act protections, including those prohibiting arbitrary interest rate changes and unfair payment allocation practices.

After collecting data we shared our findings with each issuer. Two of them – namely, Citi and Synchrony– either did not meet our deadline for input or did not provide any feedback.

You can find the detailed scoring framework used to evaluate each issuer below. Each metric within this framework was assigned a given weight based on its importance to the small business cardholder. All metrics were binary, with either full points or no points being allocated.

1. No arbitrary interest rate changes on existing balances (weight: 40%)

• If the issuer does not apply an increased interest rate/penalty APR to an existing balance unless the cardholder is at least 60 days delinquent = 40%
• If the issuer can apply an increased interest rate/penalty APR to an existing balance before the cardholder is at least 60 days delinquent = 0%

2. No double cycle billing (weight: 15%)

• If the issuer does not use the average balance over the past two billing cycles to determine finance charges = 15%
• If the issuer uses the average balance over the past two billing cycles to determine finance charges = 0%

3. No universal default (weight: 15%)

• If the cardholder is not considered to be in default on their credit card account because of a missed payment on a separate credit card, loan or bill = 15%
• If the cardholder is considered to be in default on their credit card account because of a missed payment on a separate credit card, loan or bill = 0%

4. 45 Day Change-Of-Terms Notice (weight: 15%)

• If the issuer provides 45 days’ notice before changing terms of card agreement = 15%
• If the issuer does not provide 45 days’ notice before changing terms of card agreement = 0%

5. Payment Allocation (weight: 15%)

• If the issuer applies the amount of a payment that is above the minimum required to the balance with the highest interest rate = 15%
• If the issuer does not apply the amount of a payment that is above the minimum required to the balance with the highest interest rate = 0%

Additional Info

The 2013’s study contains additional information provided by the issuers to explain their small business card policies and minor CARD Act protections they have proactively adopted but were not evaluated in our report.

The only issuer to provide any updates thereafter was U.S. Bank in 2014. It established same-day monthly due dates, implemented a minimum 24-day grace period between when a bill is made available and when payment is due, included a breakdown of different balances and promotional expiration dates on monthly statements, and began providing annual interest and fee summaries to cardholders.

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