This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hidden Dangers of Business Credit Cards

NEW YORK ( TheStreet) -- Small-business owners should take precautions when using a business-specific credit card. Understanding personal liabilities and avoiding monthly balances are crucial.

That's the theme emerging from a new report by, a credit-card comparison Web site.

The report examined policies at the 10 largest credit card issuers -- American Express (AXP - Get Report), Bank of America (BAC - Get Report), Capital One (COF - Get Report), JPMorgan Chase (JPM - Get Report), Citigroup (C - Get Report), Discover Financial (DFS - Get Report), HSBC (HBC), USAA, U.S. Bancorp (USB) and Wells Fargo (WFC - Get Report) -- to see who was liable for small-business credit card use and how the cards were reported to major credit bureaus.

The report found that eight of 10 issuers hold the owner personally liable for use of the business credit card. (USAA doesn't offer a card, and information for Wells Fargo was unknown, according to

Six of the 10 make it a practice to report business credit card usage to their cardholder's major credit reports, the report found.

Odysseas Papadimitriou, CEO of, found the results alarming, considering there were new consumer protection laws implemented last year under the Obama Administration's Credit Card Accountability Responsibility and Disclosure Act of 2009.

The CARD Act was designed to increase protections for consumers by making credit card terms more transparent and doing away with shoddy card practices, including excessive fees and frequent interest-rate hikes by some banks.

Small-business cards do not share the same requirements as consumer credit cards for transparency and protections, despite the fact that the owner's personal credit history is taken into account for determining lines of credit and they are held personally liable for the cards.

Small-business cards are "exactly consumer credit cards," according to Papdimitriou. "They're just calling them a different name."

"Don't get confused by this marketing campaign that the credit card companies have created by calling them business credit cards. Realize that you are held personally liable for these cards in the same way you are held liable for a personal credit card," he says.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AXP $65.79 -0.66%
BAC $14.82 -1.30%
C $46.80 -1.00%
COF $73.24 -1.40%
DFS $56.58 -1.00%


Chart of I:DJI
DOW 17,820.48 -221.07 -1.23%
S&P 500 2,075.31 -19.84 -0.95%
NASDAQ 4,808.5970 -54.5440 -1.12%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs