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CEO Blog: The Best and Worst Credit Card Companies for Small Businesses

Credit Card Swipe
Credit Card Swipe

As a small business owner, you need a credit card company you can count on.

You need a financial partner that will be in your corner, that will care about your needs and help you navigate the treacherous financial landscape.

However, not all credit card companies are created equal, particularly in light of the fact that issuers are not required to provide their business credit cards with protections under the CARD Act of 2009.

Some proactively extended these protections to their business offerings, thereby displaying a commitment to meeting the needs of small business owners and the foresight to realize the eventuality of a required change. Others, illustrating a lack of customer commitment and a shortsighted desire to meet only the minimum required by the law, apparently have no qualms with subjecting small business owners to unpredictable debt costs and poor transparency. So, which credit card companies are the best and which are the worst? Which issuers should consumers avoid and which should they gravitate towards?

The Worst

According to a Small Business Credit Card Study by Card Hub, Wells Fargo , HSBC , and U.S. Bank are the worst credit card companies for small business owners. Not only have they failed to extend CARD Act protections to their business credit cards, but they also refuse to be upfront about the exact nature of their policies both in this regard and in terms of reporting business credit card usage information to small business owners’ individual credit reports. If these issuers don’t soon wake up to the fact that transparency and fair treatment of customers are king in the new credit card landscape, their position in the business credit card space will rapidly decline. For now, small business owners are better served looking elsewhere for plastic.

The Middle of the Pack

The cards within this section run the gamut from Citi — which did not apply CARD Act protections to its business credit cards but was at least upfront about it — to Capital One and American Express — which applied some of the five most important CARD Act protections (i.e. no double-cycle billing, no universal default, 45 days notice before change of account terms favorable payment allocation, and; no interest rates increases on existing balances unless 60 days delinquent).

Chase and Discover fall somewhere in the middle. While they did implement a number of the minor CARD Act protections (such as those requiring statement redesigns in the name of clarity and the improvement of payment logistics), neither gave its business credit cards any of the five most important CARD Act protections.

The Best

Bank of America is, without a doubt, the best credit card company for small business owners. First of all, it was transparent. Second, and perhaps more importantly, Bank of America applied every major CARD Act protection to its credit cards, making it the only major issuer to protect its indebted business credit card accounts from arbitrary interest rate increases.

As a result, small business owners can use Bank of America business credit cards as their sole business spending vehicles. Owners must supplement use of any other business credit card by using a personal credit card for transactions leading to a revolving monthly balance or risk sudden increases in the cost of their debt. What’s more, Bank of America has positioned itself as the most forward-thinking business credit card company. As a result, Bank of America should increasingly dominate the business credit card market moving forward and will perhaps lead the way toward other industry improvements as well.

Odysseas Papadimitriou is the founder and CEO of Card Hub, a website with an extensive collection of business credit cards for new businesses as well as the best credit card deals.