2017’s Most Small-Business-Friendly Credit Card Companies
2:54 AMPosted 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.
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 |
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 |
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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