A new legislative bill has slapped a host of constraints on the credit card industry. Within the next nine months, credit card companies will be forced to change their ways. Some key stipulations of the new bill include:
Credit card companies must give 45 days notice before increasing interest rates.
Late fees will be prohibited until a payment is at least 30 days overdue.
Over-the-limit charges will be significantly reduced across the board.
So what do all of these nuances mean for small business owners?
Small business owners are often forced to rely on credit cards to manage a variety of responsibilities, ranging from paying utility bills to stocking their shelves with inventory. Continual increases in interest rates and late fees often impact small business owners negatively. With these new stipulations, small business owners will experience a significant loosening of the credit card belt.
A Leveler Playing Field
Small business owners do not have the luxury of relying on corporate structure to back their credit. Because small business owners often put their personal credit on the line to keep their companies alive, the new credit card regulations will make it easier for them to get ahead.
Shorter Credit Lines
One negative factor that small business owners might want to weigh is that with the regulation of credit card companies, it will become more difficult to secure a line of credit. Credit card issuers will be less likely to extend generous lines of credit to small business owners. Small business owners should be prepared to see shrinking credit lines and less frequent increases as time progresses.
This new legislation is just one manner in which the government is trying to combat the effects of the economic recession. It is obvious that the new credit card bill will change the way that big credit card companies do business, as well as the way that small business owners use their lines of credit. Overall, the new legislation should have a positive impact on small business owners. Keeping up with monthly credit card bills should become more realistic in the near future.