'Business' cards offer individual borrowers few safeguards

6/19/2011

Households receiving offers for "business" credit cards would be wise to throw them away, a nonprofit research group warns.

Business credit cards are marketed to corporations, small-business owners, sole proprietors, and individuals who may want to use them to keep track of work-related expenses. The cards generally offer services to help categorize and monitor transactions.

But the cards aren't covered by consumer protections under the credit card reform act that took effect in 2009 and 2010, according to a report last month from the Pew Charitable Trusts in Washington.

For example, nothing prohibits their interest rates from shooting up -- even retroactively on existing balances -- with no warning.

How do consumers know if they are applying for a business card?

The application will say the card is for business or professional use, said Nick Bourke, director of the Pew Safe Credit Cards Project.

The credit card comparison Web site CardHub.com recently released its list of the worst cards across a number of categories.

They are:

● Visa Black Card. This card, which has a $495 annual fee and 14.99 annual percentage rate, has few meaningful perks, offering the standard 1 percent cash back on purchases, airport lounge access, and the vague promise of "luxury gifts," CardHub said.

● Wells Fargo Business Platinum card. CardHub calls this card "unquestionably the worst business credit card on the market." It carries an interest rate of 9.24 percent and 18.24 percent and does not provide cash back or other rewards.

● First Premier Bank card. This partially secured credit card, aimed at people trying to rebuild their credit, has particularly unfriendly terms, CardHub said. Holders pay a $95 security deposit to get a $300 credit line with an interest rate of 49.9 percent. They also pay a $75 annual fee the first year and $120 each year after.

In contrast, the Capital One partially secured MasterCard carries a $29 annual fee and an interest rate of 22.9 percent and requires a $200 deposit to get a credit line of up to $3,000.

● USAA military affiliate card. With an interest rate of 9.9 percent to 25.9 percent, it has no rewards or low-rate introductory offers.

The Block New Alliance consists of The Blade and the Pittsburgh Post-Gazette. Patricia Sabatinis is a reporter for the Post-Gazette.

Contact her at: psabatini(at)post-gazette.com.