Watch out for “Professional Credit Cards” in the mail

August 30, 2010 by · Leave a Comment
Filed under: Credit News 

The WSJ did a nice expose’ on the rise of “Professional Cards”.  These cards are targeted towards small business owners and the self employed.   It is quite interesting that these credit cards are not covered the the credit card reform act that just went into effect.

The article mention that there has been a whopping 256% increase in these offers compared to last year.  The industry says there has been no increase in these offers above real demand from business operators.  They still have all of the old profit centers of the credit cards of late.

It is not all clouds, come of the credit card companies like Capital One have voluntarily implemented many of the provisions from the reform act.   I think there will be an outcry and we should see the banks do the same.  End of the day, the banks need to get back to normal operations and make money the good old way, lending.

WSJ – Amid all the junk mail pouring into your house in recent months, you might have noticed a solicitation or two for a “professional card,” otherwise known as a small-business or corporate credit card.

If so, watch out. While Capital One Financial Corp.’s World MasterCard, Citigroup Inc.’s Citibank CitiBusiness/AAdvantage Mastercard and the others might look like typical plastic, they are anything but.

Professional cards aren’t covered under the Credit Card Accountability and Responsibility and Disclosure Act of 2009, or Card Act for short. Among other things, the law prohibits issuers from controversial billing practices such as hair-trigger interest rate increases, shortened payment cycles and inactivity fees—but it doesn’t apply to professional cards .

Until recently professional cards largely had been reserved for small-business owners or corporate executives. But since the Card Act was passed in March 2009, companies have been inundating ordinary consumers with applications. In the first quarter of 2010, issuers mailed out 47 million professional offers, a 256% increase from the same period last year, according to research firm Synovate.

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