March 29, 2010
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News: What's The Deal With Sm Business Credit Cards?
Although new credit card reform legislation provided some relief to Americans in respect to over-the-limit fees, small business owners have not been so lucky. While drafting the new bill, lawmakers failed to include protection for small business cardholders. An oversight or deliberate, call it what you like, simply put; lawmakers messed up. American Express (AmEx) a major issuer of small business credit cards announced back in the fall that "Although it's not required by the new credit card laws" the company will eliminate over-the-limit fees. It wasn't long before small business owners discovered there was a catch to AmEx's policy.
Shortly after AmEx made its announcement, small business owners noticed they continued to be charge over-the-limit fees. Furthermore, it appeared AmEx was not consistent in the way that they handled over-the-limit fees making it difficult for credit cardholders to know to manage transactions. A spokesperson from AmEx explained that the company handles each situation on a case by case basis. The company looks at the spending habits, payment record, the amount of the charge, and other items when determining whether to approve or deny the over-the-limit transaction. By most standards, the method is ambiguous to say the least. AmEx also noted that the over-the-limit fee is only assessed to credit cardholders who are over the limit at the end of the billing cycle. With this in mind, cardholders should be able to manage their accounts.
Although small business credit cards were not included in the approved bill, there was a last ditch effort by Representative Neil Abercrombie (D-HI) to amend the bill to include small business cards. However, Democrat Representative Nydia Velazquez from New York did not throw in her support for the amendment. It's unclear why she didn't support the amendment in view of the fact that Ms. Velázquez is a strong advocate for small businesses. If Mr. Abercrombie's proposal had passed, small businesses would have been protected against such unfair and arbitrary fees that include over-the-limit penalties. One would also wonder "How" American Express can justify its double standard.