In the wake of the new CARD Act, lenders are scaling back on consumer credit card offers, as increased protection for consumers means lower profits for banks. Instead, creditors are ramping up business credit card offers, as the CARD Act does not apply to them. And since you apparently need not own a business to qualify, lenders were able to send out 46 million of these credit card offers in the first quarter of 2010, an increase of 256 percent over the same time period last year!

In response, New York’s Democratic Senator Charles Schumer has asked the Federal Reserve Board to require card issuers to state in the offer that business credit cards are not intended for personal use:

“Credit card companies are purposely hawking corporate cards to consumers who don’t own a business and may even be retired,” says Schumer. “This is more than deceptive marketing. It is a dirty trick meant to get around the new credit card law.”

Thanks to the CARD Act, the differences between consumer credit cards and business credit cards are huge. Though it may be easier to get a business credit card these days – with higher credit limits, better rewards, and easier recordkeeping – the drawbacks are significant.

For instance, if you have a business credit card, lenders can:

• Raise your interest rate at any time
• Charge exhorbitant overlimit fees
• Apply your payments to lowest rate balance intead of the highest

For these reasons, some people are choosing to use consumer credit cards for business transactions. However, keep in mind that only with a business credit card can you write off your interest payments as a business expense on your taxes.

Bottom line: only apply for a business credit card if you actually own a business and, in that case, look for banks that may be voluntarily enforcing some CARD Act regulations on business credit cards, such as Bank of America.

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