Credit card interest rates for small business owners increased as much as 20 to 30 percent since January, but small businesses are maintaining good credit despite the hikes, a recent study said.
The study suggests recent legislation protecting consumers – and not businesses – from unfair billing practices and rate hikes is to blame.
“We predicted earlier this year that small businesses would be subject to rate increases as the banks try to make up for lost consumer revenue resulting from the CARD Act ,” said Schwark Satyavolu, CEO of BillShrink, a product and service comparison website that released the study this week.
“Since small businesses aren’t protected, they appear to be an easier target for card rate hikes.”
Card rates for consumers have stabilized since February, the month the Credit Card Accountability, Responsibility and Disclosure (CARD) Act took effect, while card rates for small businesses swelled as much as 20 to 30 percent.
“However, our study shows that despite the lack of legislative protection and a poor economy, American small businesses are pulling through to keep their debt in check while maintaining good to excellent credit health.”
Of the roughly 2,300 small businesses surveyed, 72 percent pay off their credit cards each month. Ninety-two percent of owners who pay off their debt in full each month reported having excellent or good credit ratings compared with just 80 percent of owners who still carry balances.
Card reward features that appealed to owners the most were cash back (42 percent) and airline-related rewards (20 percent).
BillShrink also found that switching to a card with better rates and improved rewards could save the average small business owner more than $1,500 a year.