Bank of America said it is extending to small business card accounts the protections against rate hikes on existing balances and certain other provisions under the new Credit CARD Act that took effect Feb. 22.
The reform’s landmark protections cover consumer credit cards, making Bank of America the first major card issuer to provide the primary protection against retroactive rate increases, along with other reform provisions, to small business accounts – despite not being legally bound to do so.
American Express and Chase have voluntarily extended limited CARD Act protections to business accounts in recent weeks.
Chase and Bank of America have each projected revenue losses of at least $500 million this year from the reform’s impact on their consumer credit card businesses.
Bank of America’s small business card accounts will now have these protections:
- No rate increases on existing balances.
- At least 45 days’ advance notice on any rate changes on future balances.
- No fee for going over the credit limit.
- Minimum of 25 days from statement closing date to payment due date.
Banking industry lobbyists have opposed requiring the same credit card restrictions in the new law for small business accounts, citing the potential of further restricting the flow of credit to struggling business owners.
But Bank of America officials are challenging that assessment, and even reiterated today its commitment to increase lending to small- and medium-sized businesses in 2010 by at least $5 billion.
The provision covering existing balances takes effect in May, and other changes will launch in July.
“Our objective is to provide solutions that help our customers better manage their daily finances and provide them with the control, choice and clarity they have asked for,” said Bank of America Deposit and Card Products Executive Susan Faulkner.
Each Bank of America business cardholder’ will also get a one-page “Clarity Commitment” that is to include:
- Rates for purchases, balance transfers, and cash advances.
- Payment information to keep the account in good standing.
- Summary of fees.
