Since small businesses aren’t protected, they appear to be an easier target for card rate hikes. However, our study shows that despite the lack of legislative protection and a poor economy, American small businesses are pulling through
Redwood City, CA (PRWEB) September 1, 2010
BillShrink (http://www.billshrink.com), a personalized search engine that compares millions of product options, today released the results of a study showing that small business owners are facing credit card interest rate increases upwards of 30% since January 2010 because their cards aren’t getting the same protections as consumer cards. The Credit CARD Act, which was enacted earlier this year, protects consumers from a number of unfair billing practices and rate hikes, but cards offered to businesses are not included under the new legislation.
In the run up before the CARD Act, one-third of issuers raised consumer card rates upwards of 20-30%, with an average overall rate increase of 16%. Since February, consumer card rates have stabilized. However, since the new legislative rules don’t affect credit cards for businesses, many issuers are significantly raising interest rates for SMBs (small medium businesses).
Despite the rising card rates and lack of protections, small businesses are maintaining good credit and tend to pay off their monthly balances to a higher degree than those who hold personal debt. According to the BillShrink study, only 27% of SMBs carry a balance on their cards compared to 40% of individuals who don’t pay off their card balance at the end of the month. The average debt held by American small businesses is $12,100, compared to the $7,020 held by individuals.
Since the beginning of 2010, BillShrink analyzed 2300 small businesses seeking advice on credit cards and found that SMBs that pay off their card each month tend to have better credit ratings and larger annual revenues than businesses that carry a monthly balance. As an example, 60% of businesses that carry a balance on their cards have annual revenues under $149,000. These entrepreneurs stated that “cash back” benefits are the most important card reward feature for their business, followed by airfare rewards.
“We predicted earlier this year that small businesses would be subject to rate increases as the banks try to make up for lost consumer revenue resulting from the CARD Act,” said Schwark Satyavolu, CEO of BillShrink. “Since small businesses aren’t protected, they appear to be an easier target for card rate hikes. However, our study shows that despite the lack of legislative protection and a poor economy, American small businesses are pulling through to keep their debt in check while maintaining good to excellent credit health.”
BillShrink's credit card feature for business guides owners toward credit cards that offer the best terms and meet each businesses’ unique money management needs. Business owners visiting BillShrink answer a series of questions about cash flow, credit usage and reward preferences. The service then searches the marketplace for best available rates, offering complete pricing transparency, and displaying the card’s true cost over time.
About BillShrink (http://www.billshrink.com)
BillShrink is a search engine that compares millions of product and service options against your unique needs. With all the fine print and endless choices, simple tasks like finding the right credit card or cell phone plan can turn into a huge hassle. BillShrink cuts through the clutter and delivers unbiased recommendations tailored to an individual’s specific needs.
In an era when eight in ten Americans overpay for expenses, BillShrink empowers and inspires people to become savvy shoppers by simplifying complex pricing structures, for everything from credit cards and wireless plans to savings accounts and gas. BillShrink shows users the true cost of ownership and identifies an average of $1500 in savings on most common bills. The company has found more than $1 billion in potential savings for over a million users.
BillShrink is a decision-oriented site that helps people make smart decisions. Users answer a few simple questions about spending and saving behavior and in less than a minute, BillShrink presents the best options on the marketplace. In order to provide individualized recommendations, the company tracks more than 10 million cell phone plan combinations, 300 bank rates, 240 credit cards and 150,000 gas stations. BillShrink then keeps the savings coming by alerting users when a better deal comes along.
BillShrink was listed among the “Top 20 Best Money Websites” by Money Magazine and named one of the “Best Web Sites” by Kiplinger’s. The company has been featured in the country’s leading news sources including The Wall Street Journal, The New York Times, Consumer Reports, Fortune, The Dr. Oz Show, The Today Show, CNN, ABC and CBS. The company publishes the popular “Shrinkage is Good” blog, which features commentary on the latest economic news and savings tips.
The Silicon Valley-based company was founded in 2007 by Schwark Satyavolu and Samir Kothari. For more information, please visit http://www.BillShrink.com. Become a BillShrink fan on Facebook (http://www.facebook.com/BillShrink) and follow us on Twitter (http://www.twitter.com/BillShrink).
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