Some consumer protection laws don’t apply to business credit cards
Here’s one reason you might use a personal credit card over a business card: Personal cards have more consumer protections from the Credit CARD Act of 2009. These are a few advantages they have that business cards don’t:
- Notifications for interest rate increases. With a personal card, your provider must notify you at least 45 days in advance if it will increase your interest rates. With a business card, it can increase your interest rates at will.
- Minimum grace period. If a personal card has a grace period on interest, the period must be at least 21 days. With business cards, the period can change each month.
- Caps on late fees. For personal cards, there are caps on late fees. These caps don’t exist for business cards, meaning providers can charge heavy fees if you pay late.
If you want a business card, gauge your ability to pay off your debt. The better prepared you are, the more likely you’ll be able to roll with the punches if your provider changes your card terms.
Why do I need a personal guarantee for a business credit card?
Most business card providers require a signed personal guarantee for approval. This guarantee is a promise between you and the creditor that you’re personally liable for your business debts. It’s similar to a business-loan personal guarantee.
This agreement protects the creditor from any unpaid debts on the card but exposes you to seizure of your personal finances or assets if you find yourself unable to pay back what you borrow.