December 22, 2008
-
News: Small Business Assesses New Regs.
There are, of course, pros and cons to the new regulations to everyone involved concerning the Fed's new credit card regulation bill. But these assessments vary between categories. One of the most concerned categories is the small business group. This group tends to already be more responsible when it comes to credit cards and other financial issues because they must sustain their own security, else they go under quickly. The credit card industry realizes this and tend to treat them more favorably because of it.
So the recent changes in credit card regulation affects small business differently than say, the general consumer. It's not that both groups don't share many of the same concerns but, they hold different priorities for each. One big priority for small business is to keep interest rates low. It remains to be seen how the new government regs will effect higher credit card interest but warnings from the industry indicate that all card holders will be looking at higher rates in the future due to these new rules.
Because most small businesses rely on credit card usage to finance and fund their survival, interest rates affect their bottom line directly. Some have voiced concerns (57%) that recent ‘arbitrary' rate hikes are already impacting them and that they would like to see some control in that area. They're concerned that the enacted changes won't go into effect soon enough (that doesn't occur until 2010). Some even advocate additional restrictions on the industry.
But a louder voice is coming through concerning caution. Unlike the general consumer, most small businesses do tend to read the fine print and meticulously make sure credit card payments are made on time. So their benefit here is only about a third as much as the general consumers get. Unlike general consumers, small businesses are more greatly impacted by interest rates, whether they be new accounts or existing ones. The Fed has already acknowledged the possibility of higher interest rates and more limited access to credit resulting from their ruling. The hope of small business is that Congress and other regulators will keep a close eye on the effects of their changes so as not to fix one problem and, in the process, cause a more important problem to worsen.