Credit Card Legislation to Support Small Business Borrowers

The House of Representatives today passed changes to the federal Truth in Lending Act, called the Credit Cardholders' Bill of Rights Act (H.R. 5244), to provide more "fair and transparent" practices by credit card companies.

This legislation, if passed by the Senate and signed by the President, would prohibit credit card companies from unfairly changing rates and other terms without notifying the creditor, and it includes other measures to help small businesses who rely on credit cards for financing. While credit cards, with their high interest rates, are probably not the best way to finance a business, many small businesses use them. A recent survey by the National Small Business Association showed that "forty-four percent (44 percent) of small businesses have used a credit card in the last twelve months to help finance their capital needs."

Other provisions of the bill require card companies to notify customers of pending rate increases and allow creditors to cancel their cards without penalty to avoid these increases. It will be interesting to see how the credit card companies respond to this provision; I have had a difficult time with several of these companies trying to get them to cancel cards, even with zero balances.

I will keep you updated on the progress of this legislation.