According to a recent article posted on businessweek.com, credit card rates for small business cards are on the rise. Thanks to the bad economy and higher loss rates, issuers have been raising rates.
According to data from BillShrink, the APR on 33 small business credit cards went up from 11% last August to 12.3% in March 2010. While rates have gone up for consumer cards as well, some of that rise is said to be due to the CARD Act reforms passed last year. Those new regulations don't cover small business cards however.
If the government decides to extend credit card reform to cover small business cards, expect lower credit lines, and generous rewards, but with lower fees and less rate changes and penalties. Small business card purchases are still seen as a growth market in the industry and the so issuers are competing for new customers.
Most of the increase in interest rates is likely due to the increased risk credit card lenders take when the economy is suffering. The rates are projected to continue their upward trend according to Ben Woolsey an analyst at creditcards.com. In regards to credit card interest rates he says, “It’s going to keep edging upward a bit, because credit losses aren’t going to improve for the banks until unemployment heads down.”
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