Janet Hard’s Story

In February of this year Janet Hard received her credit card statement from Discover and had quite a surprise waiting for her. The interest rate on her credit card with Discover had an interest rate hike from 18 percent to 24 percent. This customer was confused by the sudden hike in her interest rate as she had been making regular payments to the card, with no late payments for two years. What she found was the credit card company had the right to inflict these raises despite the good standing. It seemed that her credit score changed to a lower point score and discover considered her a higher risk. For business credit cards you will not see these adverse affects. Business credit cards differ in that the information is based solely on the business rather than the individual.

When you have regular credit cards your credit history and score determine the interest rate hikes. For business credit cards the company looks at how the business is getting along and whether it is a risky venture. Right now for business credit cards construction companies or real estate offices may see higher rates because of the risk they are taking in the current market. However for most business credit cards one would be safe from the increase in current interest rates.

Going back to the Hard case it seems most lenders believe they have the right to increase the interest rates despite the customer being on time with payments because her credit score changed. One has to be very careful with both business credit cards and regular credit cards of these conditions. When you obtain business credit cards you need to ask what the credit card company’s policies are. If you have business credit cards does the company or issuer see the same options apply as regular credit cards. If the business or owner of the business has a change in the credit rating will you have an increased rate? How do business credit cards issue their cards? Most often it is reflective of the actual business, but with the credit crunch it may also have something to do with the individual depending on the type of company you have.

To make sure you business credit cards work for you, you should understand their policies. It may be better to have business credit cards at this point over personal cards. If you have high balances on the business credit cards you may be affected by a rising interest rate. The higher the balance and the more risk anyone or business posses the more likely the companies are to increase the interest rates. When you have business credit cards you should only have one or two. Having eight can also increase the interest rate as you have a high amount of revolving credit and possibly debt.

Business credit cards are also affected by the credit crunch so make sure you talk with your company about the different policies to make sure you don’t end up in a court proceeding regarding raised rates and the malpractice of credit card companies. Most often you will find the credit card companies are more ethical with business credit cards over the personal cards as there is typically more assets.

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