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2016’s Most Small-Business-Friendly Credit Card Companies

Small Business Study 2016Small business owners aren’t people. Well, at least that’s how the current regulatory environment portrays them. Congress left the small business community out in the cold by excluding credit cards branded for business use from coverage under the Credit CARD Act of 2009. That might not seem like too big of a deal at first, but consider all the CARD Act has done for consumers in recent years.

The law’s bans on bait-and-switch pricing, exorbitant fees and shady accounting practices have resulted in not only a more transparent marketplace, but also a $6 decrease in the average late fee, the near-elimination of over-limit fees and a two percentage-point reduction in the overall cost of credit between 2008 and 2012. That, of course, has saved consumers billions of dollars.

The most important protection that small business owners aren’t receiving prohibits credit card companies from raising the interest rate on an existing balance unless the cardholder is at least 60 days delinquent. That means small business owners – the 37% of whom use credit cards for financing purposes – never really know how much their debt will cost, which in turn prevents them from confidently allocating capital, causing unknown damage to the economy.

“Credit card debt instability is a huge problem for smaller businesses—particularly younger businesses since they rely more heavily on credit cards,” Molly Day, VP of public affairs for the National Small Business Association, told CardHub. “If entrepreneurial people can’t garner the capital to launch a business we’ll see fewer start-ups, which means slower employment growth and less innovation.”

The good news is that a number of major credit card issuers have taken it upon themselves to proactively extend certain key CARD Act protections to their suite of small business offers. Understanding which issuers have adopted which protections is beneficial not only to small business owners shopping for a credit card, but also to consumers and investors who are seeking to understand which major banks are most sophisticated and best suited to see the regulatory writing on the wall.

Main Findings

 

  • Bank of America continues to be the most small-business-friendly credit card company, as it is the only major issuer to have extended all of the major CARD Act protections to its business-branded cards.
  • All major credit card issuers hold customers personally liable for business credit card use.
  • Every major issuer uses personal credit data to determine eligibility for business-credit-card accounts.
  • Bank of America, U.S. Bank and Citi are the only major issuers that do not report business card activity to customers’ personal credit reports.
  • Nine issuers tied for the distinction of least small-business-friendly, with their meager Card Act adoptions earning only 30% scores.
  • 75% of the largest banks and credit unions offer general-purpose business credit cards.

Issuer Policies & Scores

Issuer Cardholder Personally Liable? Usage information relayed to personal credit reports? CARD Act Protections Score Transparency Notable Changes
American Express Yes Yes, when the account is cancelled and seriously delinquent 60% Good None
Bank of America Yes Not currently 100% Good None
Barclaycard US Yes Yes, when the account is cancelled and seriously delinquent 30% Good N/A
Capital One Yes Yes 60% Good None
Chase Yes Yes, when the card holder is more than 60 days delinquent 45% Good None
Citi Yes No, but business credit card payment history may impact ability to obtain approval for a Citi consumer credit card 45% Good None
Discover* Yes Yes, when the account is cancelled and seriously delinquent 30% Good None
USAA N/A (does not offer a business credit card) N/A N/A N/A None
U.S. Bank Yes No 30% Good No longer reports business card usage to customers’ personal credit reports
Wells Fargo Yes Yes, when the account is in default** 30% Good None
Fifth Third Bank Yes Yes, when the account is seriously delinquent 30% Good N/A
Synchrony Bank Yes Yes, when the account is cancelled and seriously delinquent 30% Good N/A
PNC Bank Yes Yes, when the account is cancelled and seriously delinquent 30% Good N/A
First National Bank of Omaha Yes Yes, when the account is cancelled and seriously delinquent 45% Good N/A
TD Bank Yes Yes, when the account is cancelled and seriously delinquent 30% Good N/A
Navy Federal Yes Yes, when the account is cancelled and seriously delinquent 45% Good N/A
State Employees’ N/A (does not offer a business credit card) N/A N/A N/A N/A
Pentagon Federal N/A (does not offer a business credit card) N/A N/A N/A N/A
Boeing Employees Yes Yes, when the account is cancelled and seriously delinquent 30% Good N/A
SchoolsFirst F.C.U. N/A (does not offer a business credit card) N/A N/A N/A N/A

*At this time, Discover is not actively promoting its business credit card. However, there are existing business cardholders, which is why Discover received a score in this report.
**Wells Fargo reports business credit card account information to the Small Business Financial Exchange (SBFE) business credit bureau on a monthly basis. The company does not report ongoing monthly performance to cardholders’ personal credit reports, except for cases of default.

Small Business Chart 2016 CH

Historical Scores & Policy Changes

 

Issuer 2011 Policy Changes 2012 Policy Changes 2013 Policy Changes 2014 Policy Changes 2015 Policy Changes 2016 Policy Changes
American Express Adopted:
- 45 day change-of-terms notice
Adopted:
- No double cycle billing
- No universal default
- Fair payment allocation
Adopted:
- Fair payment allocation
No Policy Changes No Policy Changes No Policy Changes
Bank of America Adopted:
- No arbitrary interest rate changes on existing balances
- No double cycle billing
- No universal default
- 45 day change-of-terms notice
- Fair payment allocation
No Policy Changes No Policy Changes Adopted:
- BofA no longer reports business card usage to customers’ personal credit reports
No Policy Changes No Policy Changes
Barclaycard US N/A N/A N/A N/A N/A N/A
Capital One Adopted:
- No double cycle billing
- No universal default
- 45-day change-of-terms notice
- Fair payment allocation
No Policy Changes No Policy Changes No Policy Changes No Policy Changes No Policy Changes
Chase No Policy Changes Adopted:
- No double cycle billing
- No universal default
- Began reporting business credit card usage information to customers’ personal credit reports after 60-day delinquency.
Adopted:
- 45-day change-of-terms notice
No Policy Changes No Policy Changes No Policy Changes
Citibank Adopted:
- No double cycle billing
- No universal default
Adopted:
- Citi stopped reporting business credit card usage information to personal credit reports for its since-discontinued professional card.
No Policy Changes No Policy Changes Adopted:
- 45-day change-of-terms notice
No Policy Changes
Discover No Policy Changes Adopted:
- No double cycle billing
- No universal default
No Policy Changes No Policy Changes No Policy Changes No Policy Changes
USAA N/A (does not offer a business credit card) N/A (does not offer a business credit card) N/A (does not offer a business credit card) N/A (does not offer a business credit card) N/A (does not offer a business credit card) N/A (does not offer a business credit card)
U.S. Bank Did not participate in the study Did not participate in the study Adopted:
- No double cycle billing
- No universal default
No Policy Changes No Policy Changes No longer reports business card usage to customers’ personal credit reports
Wells Fargo Did not participate in the study Adopted:
- No double cycle billing
- No universal default
No Policy Changes No Policy Changes No Policy Changes  No Policy Changes
Fifth Third Bank N/A N/A N/A N/A N/A N/A
Synchrony Bank N/A N/A N/A N/A N/A N/A
PNC Bank N/A N/A N/A N/A N/A N/A
First National Bank of Omaha N/A N/A N/A N/A N/A N/A
TD Bank N/A N/A N/A N/A N/A N/A
Navy Federal N/A N/A N/A N/A N/A N/A
State Employees’ N/A N/A N/A N/A N/A N/A
Pentagon Federal N/A N/A N/A N/A N/A N/A
Boeing Employees N/A N/A N/A N/A N/A N/A
SchoolsFirst F.C.U. N/A N/A N/A N/A N/A N/A
Previous Reports 2011 2012 2013 N/A N/A N/A

Additional Info

The 2013’s study contains additional information provided by the issuers to explain their small business card policies and minor CARD Act protections they have proactively adopted but were not evaluated in our report.

The only issuer to provide any updates thereafter was U.S. Bank in 2014. It established same-day monthly due dates, implemented a minimum 24-day grace period between when a bill is made available and when payment is due, included a breakdown of different balances and promotional expiration dates on monthly statements, and began providing annual interest and fee summaries to cardholders.

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DISCUSSION
Aug 7, 2014
Photo of Mark S.
Aug 7, 2014
Barclay's does have business credit cards. They underwrite business cc for US Airways for example.
Sep 9, 2014
Photo of Card H.
Sep 9, 2014
The business card offered by Barclays and US Airways is a co-branded credit card. Barclays offers only co-branded business credit cards which weren't taken into account in the report.
May 15, 2014
Photo of Jeffrey T.
May 15, 2014
The article mentions "Every major issuer uses personal credit data to determine business credit card eligibility." Could you provide some information on non major issuers who offer credit based on the financial strength of the company rather than relying on personal credit info?
May 23, 2014
Photo of Card H.
May 23, 2014
We only track the small business underwriting policies of the nation's largest issuers, but it is likely that the majority of smaller financial institutions operate in the same manner. To be certain, however, we recommend calling the issuer of your card of choice prior to submitting an application.