Do Business and Personal Credit Cards Offer the Same Protections?

While there are benefits to using a business credit card to handle your company’s expenses, there is one potential drawback — business cards are not bound by the same government-mandated consumer protections as personal credit cards.

This means that specific protections offered by consumer card issuers (for example, APR increase limits or fraud protection) may or may not be provided by their business card counterparts.

So, if you are one of the 53% of small business owners that regularly turn to credit cards as an external funding source, protect yourself by doing your homework. Find out if that business credit card you are considering offers the same protections as a personal credit card.

Business credit cards are not required to have fraud protection, but most offer it anyway. This means if your personal or business card information is stolen, you will not be held liable for unauthorized charges. 

Personal Card Spending Protected by the Credit CARD Act

In 2009, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) into law. The law was written to protect consumers from unfair practices initiated by credit card companies. It did this by limiting fees, regulating marketing practices, and removing hidden costs from personal credit cards.

Under the law, personal credit card issuers are also required to:

  • Maintain the annual percentage rate (APR) on existing balances.
  • Provide a 45-day notice before hiking interest rates on new purchases.
  • Limit a penalty APRs to their card and not in response to a late payment associated with another card company’s account.
  • Refrain from marketing to college students or issuing cards to anyone lacking enough income to meet payment obligations.
  • Utilize one billing cycle’s balance to calculate monthly interest charges.
  • Limit late fees as determined by the Consumer Financial Protection Bureau (CFPB). These are currently capped at $29 (first-time) and $40 (subsequent).
  • Limit annual maintenance fees to 25% of the card’s credit limit.
  • Send the statement at least 21 days before the payment due date.
  • Apply any extra payments you make (anything that’s over and above the minimum amount due) to the portion of your balance with the highest interest.

Business Credit Cards Lack Governmental Protections

Though business credit card issuers can voluntarily offer similar protections to their customers as those listed above, they are not mandated by law to do so. 

This means business credit card APRs can change without notice, even on existing balances. Late fees and annual fees can be assessed at much higher rates than on consumer cards. And business card issuers are allowed to credit payments to accounts in any way they choose. 

Personal and Business Credit Card Protections

There are other protections both business and personal credit card companies offer their customers. 

Except for consumer fraud protection, most of these assurances are left up to the issuer’s discretion and may or may not be part of the terms offered when you sign up.

Fraud Protection

Consumer credit cards are mandated by federal law to offer coverage for any unauthorized charges over $50, less if your card was stolen and you reported it promptly. Because of this federal mandate, personal cards will always include fraud protection benefits. 

Business credit card companies are not required to offer protection against fraudulent transactions, but most do anyway. In fact, a majority of business and personal card issuers will not hold you liable for any charges made on your card without your approval, even smaller amounts beneath the $50 threshold. 

Price Protection

A card company that offers price protection will reimburse you for a portion of your purchase if it goes on sale within a specified time — typically within 60 to 90 days. 

With price-protected cards, you’ll receive a refund equal to the difference between the price you paid and the sale price.

Purchase Protection

If an item bought with your card is broken or stolen, purchase protection will pay to have it replaced, repaired, or refunded. However, the card issuer might list specific items as ineligible for this benefit.

Additionally, your claim will have to be made within a particular time window — often within 90 to 120 days after the date of purchase.

Return Protection 

If the merchant where you made your purchase won’t let you return the item, your card’s return protection benefit may allow you to be reimbursed. Common restrictions include:

  • The purchased item must be unused
  • It must be in working condition
  • The return must take place within 60 to 90 days after purchase

Rental Insurance

Many business and personal credit cards include rental insurance for vehicles rented with the card.

Restrictions apply as to the type of vehicle covered. If you crash due to driving recklessly or under the influence of alcohol, you will likely forfeit this protection.

Travel Insurance

Travel insurance varies widely from card to card. Some protections you might benefit from include:

  • Trip delay or cancellation coverage
  • Reimbursement for lost or delayed baggage
  • Trip accident reimbursement
  • Emergency evacuation coverage
  • Emergency medical attention when you are away from home

Revenued’s Business Card Alternative

In addition to lacking consumer credit protections, most business cards include drawbacks that prevent many firm owners from benefiting — time-in-business requirements (often two years or more), a solid credit history, and a minimum credit score, to name a few.

The Revenued Business Card offers business card flexibility and access to short-term funding without the qualification headaches. Companies with subprime credit and a minimum of six months of operational history are eligible.

Learn More About How the Revenued Card Can Help Your Business

To find out more about the Revenued Card or our other financial products, call  +1 (877) 662-3489 and talk to one of our trusted experts. You can also fill out our online form, and somebody will get back to you as soon as possible.

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