To card companies, everyone's a pro
Credit card companies are pushing 'professional' cards, which don't have the new consumer protections of personal cards.
Aren't you special. Credit card companies have decided that you're a "professional" and are sending you applications for their "professional" cards. It doesn't matter if you're retired or, say, drive a tow truck for a living.
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But therein lies a trap. While your personal status hasn't changed, the rules for personal credit cards have. The so-called professional cards, unlike personal cards, aren't subject to the consumer protections in the now fully implementedCredit CARD Act. Post continues after video.
For instance, holders of professional cards, as well as small-business cards, could see their interest rates spike if their payment is a tiny bit late, and they have no protection from exorbitant fees or sudden changes to the card agreement.
Suddenly, it seems, we're all professionals from the card companies' point of view. The Wall Street Journal reports:
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.
The WSJ observed that companies have also relaxed their standards for who can apply for professional cards. For instance, those who apply for a Chase Cash Business Card only have to check a box saying "Yes, I am a business owner" or "Yes, I am a business professional with business expenses." More information, like a tax identification number, used to be required.
Lauren Lyons Cole wrote at LearnVest that "the application process has been streamlined to the point that you could find yourself opening one without realizing it's a professional card."
In response to such reports, U.S. Sen. Charles Schumer, D-N.Y., has asked the Fed to require that card companies get a federal tax identification number from business applicants before approving business and professional card applications.
"Credit card companies are purposely hawking corporate cards to consumers who don't own a business and may even be retired," Schumer said, according to Bloomberg. "It is a dirty trick meant to get around the new credit card law."
Meanwhile, what should you do?
Read the fine print. If you're a consumer, you want the protections provided by the CARD Act. If you're a small-business owner, proceed with caution, and know that those protections don't apply to your business or professional card.
The WSJ interviewed a guy who had applied for a professional card without realizing what he'd done. He thought it was a personal card covered by the Credit CARD Act. Have you gotten sucked into that trap?
More from MSN Money:
- Credit card reform: The other shoe drops
- This is credit card reform?
- Some people can't get credit? Good!
- Credit card issuers dodge new law
- Are consumers winning credit card war?
- Is there a statute of limitations on debt?
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