Beware new credit card offers

Seven On Your Side
September 14, 2010 12:24:41 PM PDT
If you're like 47 million other consumers you've gotten these credit card offers in the mail. They're trying to get you to sign up for a business credit card. They come with nice perks. But, if you're not careful, there's a downside that could you big bucks. American Express offers a Delta Sky Miles Card. Visa has a Venture card. And major banks are getting in the act too. The are so-called business or professional credit cards. And now offers like these are going out to millions of people, many don't even own a business.

In some cases, they offer zero percent interest rates and perks like bonus frequent flyer miles. But Adam Levin of credit.com cautions there's one big caveat. "They're bad because they don't have the protections that the credit card has actually given consumers."

There's a loophole in the legislation. Business cards aren't covered under last year's Credit Card Accountability and Responsibility Disclosure Act (aka CARD).

"Under the CARD act, in the event the bank decides to raise your rate or fee, they have to give you 45 days notice before they do it. With these cards, they don't have to," cautions the expert.

The same goes for late payments, the CARD act states banks can't raise your rates unless you're 60 days late. But...

"with these cards, you could be literally 2 or 3 days late and they could jack your rate up to a default rate, which is in the high 20's (%)."

For example, this card's zero percent interest rate jumps to 29.99% if you're late paying by one day.

Same goes for grace periods. Some of these business cards don't have one. So before signing up...

"The most important thing is always to read the fine print," says Adam Levin.

Spokespeople for some of these business cards point to the perks and bonuses as plusses that regular credit cards don't offer. We should mention some business card issuers DO adhere to the CARD act rules. But, like the expert says, you should closely review the terms before signing up.

LINK: http://www.credit.com/

Story by: Nina Pineda


Produced by: Steve Livingstone CONNECT WITH NINA PINEDA AND 7 ON YOUR SIDE

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