According the recently released Federal Reserve Survey of Loan Officers, major banks are making it increasing difficult for small business owners to obtain credit cards. While this is clearly a major issue, and one small business owners have been facing for some time, it may actually help small business owners who opt to use personal credit cards instead of business cards.

Unlike personal credit cards, small business credit cards do not provide the same protections to cardholders. For example, a bank can raise rates on current balances held on a small business credit card at any time, for any reason. Thus, with a small business card, it is quite possible to have interest rates increased from 10% to 29% whenever a bank may desire to do so. The same is not true for consumer credit cards. Banks cannot raise rates on pre-existing balances and must provide 45 days notice before raising rates on future balances.

While protection from anytime, any reason rate increases is by far the best reason to use a consumer credit card, there are also other benefits. These include protections from late fee traps, the end of double cycle billing, and requires an opt in for over the limit fees.

In addition to the extra protections afforded by the CARD Act, consumer credit cards also come with more generous 0% interest rate periods. With a consumer card, it is possible to get a 0% APR for 15 months or longer, depending on the card.

Of course, using a personal credit card is not an ideal option for some small businesses, especially those that have a large number of employees who use company credit cards.  However, for sole proprietorships and other small businesses where the owner controls the credit card, using a personal credit card may be the best option to obtain a credit card and protect yourself from credit card companies.

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