If it seems like credit card companies are suddenly more accommodating to credit card holders, it’s not that they’ve had a change of heart.They are merely complying with the final phase of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, which took effect in August.Now, credit card companies must give their customers a 45-day notice before increasing a card’s interest rate, and they can’t raise the interest rate on an existing balance.They’re also prevented from raising a card’s interest rate in the first year, unless the rate was clearly marketed as an introductory rate good for at least six months, or no payment has been made for 60 days.Inactivity fees and multiple penalties for a single infraction are prohibited, and penalties can be no more than the amount of the infraction or $25, whichever is higher.Not to be caught flat-footed, before the new rules went into effect, credit card companies pushed the average interest rate to 14.7 percent – the highest it has been since 2000 – said Jason Gray of GoalView Advisors.”The important thing to know is the new rules are only for individual consumer credit cards,” Gray said.”All those laws don’t apply to small business cards. There are a lot of folks, especially in Falcon, that have small businesses, and they need to be very careful putting their business debt on a business credit card.”Trish Grihalva of Forest Financial and Accounting Services echoed that caution.”There is a tendency with small business people to use credit cards as a way of capitalizing their company, and it’s just not a smart thing to do,” she said.”I have clients who’ve gotten in over their heads [with credit cards]. The problem is people have been blasted with so many credit card offers, and get into debt. They think they’ll have a job, and then they get laid off, and they’re really in trouble.”She said she would avoid the get-out-of-debt programs advertised on the radio and television. “I wouldn’t trust them,” Grihalva said.Negotiating with the credit card company might be the better solution.Some credit card companies are more willing than others to settle for partial payment, but not before the cardholder is behind in payment three or four months, she said. “By that time, you’ve trashed your credit, and you have to pay income tax on the debt forgiveness, unless you’re bankrupt or insolvent,” Grihalva said.The financial reform bill (officially, the Dodd-Frank Wall Street Reform and Consumer Protection Act) signed in August affects credit card use in another way.It used to be illegal for a business to post a notice requiring a minimum purchase when a customer pays with a credit card. Now, it’s legal to require a minimum purchase of $10 when the customer is paying by credit card, Gray said.Businesses, like Starbucks, that deal with quite a few small-dollar transactions are unlikely to require a minimum purchase to use a credit card, but mom-and-pop businesses, which don’t get the best deal from credit card companies, probably will, he said.Financial reform affects small businesses and credit cards in yet another way.”Credit card companies are now limited in how much they can charge small businesses per swipe,” Gray said. He said credit card companies will make up that revenue by bringing back annual fees for credit cards, and getting rid of frequent flyer miles and cash-back programs.The new rules also allow colleges to limit the amount of tuition that can be paid by credit card. Colleges have been paying as much as 2 percent in transaction fees to credit card companies.”Parents who were paying for college tuition on their credit card in order to get a free trip to Acapulco aren’t going to be able to do that anymore,” Gray said.Similarly, the federal government will save on credit card fees because the financial reform bill allows federal agencies to limit the maximum amount paid to the government by credit card, he said.The bill contains another provision that will help businesses lower the impact of credit card fees to their bottom line.According to www.bankrate.com, businesses can now offer discounts for payment by cash or debit card.
