While consumers don’t have to worry about credit card rate increases, small businesses still need to closely monitor their credit card statements.  Why?  Because small business credit cards aren’t covered by the CARD Act, credit card companies can increase interest rates at any time, for any reason.

I recently found a rate increase notice on page 9 of a 13 page credit card statement from American Express.  Presently, the rate on this particular business card is a very reasonable 12.24%.  On August 1st, the rate increases by nearly 30% to 16.24%.

If I want to opt out of the interest rate increase, I have until August 20th to call in and close my account.  This would allow me to repay my current balance at the lower interest rate.  However, if I want to keep my card open, I must accept a higher interest rate.

Small business credit card holders across the country may get similar, hard to find notices buried deep in their credit card statements.  If I didn’t write about credit cards, I would have tossed that portion of the bill in the garbage.  If I had done so, and I carried a $10,000 balance on the card, the oversight could have cost me $400 in additional interest due to the higher interest rate.

Prior to the implementation of the CARD Act, credit card companies embarked on a massive spree of  rate hikes, leaving some consumers with 29.99% interest rates.  While it is unlikely that credit card companies will get that aggressive with small business credit cards, interest rate increases are always a threat to small business owners.

Companies that don’t revolve monthly balances obviously aren’t going to be hurt by rate increases such as the one American Express imposed on my account.  However, all small businesses that carry credit card debt need to carefully review all 5, 10 or 50 pages that arrive in the mail every month to make sure they don’t accidentally accept substantial interest rate increases that could strain their finances.

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