The current unemployment rate is still much higher than many would like. According to the US Labor of Statistics, 8.2% of women are unemployed. The same report goes on to say that approximately 9.2 million Americans are only employed part-time, due to employers being unable to pay full-time employees. These statistics have forced people to become entrepreneurs to get a job. The Credit Card Act of 2009 could provide relief to these unemployed entrepreneurs, but only on their personal credit cards.
The Credit Card Act of 2009 was signed by President Obama last May. With some provisions already in place, this law will be in full swing. 22 of 2010.
What are the benefits of this act?
– Cardholders will be able to avoid interest rate hikes on their existing card balances and will have more time to pay their monthly bills.
– Before the bill was approved, many card companies could change their expiration dates without notice, giving you less time to pay your bill. Now, credit card companies will have to give you no less than 21 days to pay your bill, and they won’t be able to raise interest rates without notice.
According to the National Small Business Association in 2008, credit cards were the most common source of financing for small business owners. The New York Times reported in September 2009 that a Monmouth University study said that “every $ 1,000 increase in credit card debt increases the probability of a business closing by 2.2 percent.” And with this increase in debt, leading companies can now buy debt leads from these card companies and make a profit.
This new law will benefit many Americans, however, it does NOT cover business / corporate cardholders. This is an important thing to keep in mind when starting your business. We could see that credit card companies are tougher on business owners as they will be forced to facilitate customers with personal accounts.
Banks are a lot tougher these days when it comes to making loans. They are considering personal debt as a factor for small business loans. Because of this, it is important to first analyze your credit card debt before starting a business. If you’ve gotten into debt, debt consolidation or credit card counseling may be options to consider.
These types of programs can simplify your personal debt and make it easier to get out of debt. This will help you get your finances in order, which should increase your chances of obtaining a loan for your business. However, if your business is already up and running, take a look at your current debt levels. If it is a significant amount, decide if you can manage debt or if you need to take advantage of a debt management program.
For now, we’ll just have to wait and see if the credit card companies will be tougher on their business / corporate cardholders in the coming months. Until then, take a look at your personal credit cards and see if you can use the law to get a business loan to start your business.
