Beware Of That New Credit-Card Offer

Wall Street Journal
August 29, 2010
Silver-Greenberg, Jessica
P. B8

Synovate reports a 256 percent surge in mailings for "professional" credit cards to 47 million in the first quarter from the same period in 2009. These small business or corporate accounts now are being offered to ordinary consumers, and consumer advocates are urging them to use caution because professional cards are not covered by the Card Act. As such, issuers can apply payments to low-rate balances first, hike rates on existing balances if consumers fall behind in payments to another creditor, impose large fees for exceeding credit limits, and alter card terms without advance notice, among other things. In a move to shift customers away from cards that are protected under the new reforms and toward unprotected cards, issuers have eased requirements for professional cards; the Ink From Chase Cash Business Card, for instance, now asks applicants to check a box stating "Yes, I am a business owner" or "Yes, I am a business professional with business expenses" instead of requiring the company's name, address, and federal employer identification number. Center for Responsible Lending senior researcher Josh Frank says, "By pushing professional cards to consumers who otherwise wouldn't want them, card issuers can get around some of the provisions of the Card Act." And Beverly Harzog of Cardratings.com warns that "a lot of consumers really don't know the difference, and some of the wording on the offers can be ambiguous."
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