CHESSNOID

Most of your credit cards probably had their terms of agreement changed before the 2009 Card Act went into effect.  That was a logistical move expected by credit card companies.  Now they have a new plan to skirt the law.  They are sending out credit card solicitations not covered by the Act.

WSJ:

Until recently professional cards largely had been reserved for small-business owners or corporate executives. But since the Card Act was passed in March 2009, companies have been inundating ordinary consumers with applications. In the first quarter of 2010, issuers mailed out 47 million professional offers, a 256% increase from the same period last year, according to research firm Synovate.

The Card Act’s strictures have squeezed banks’ profits and their ability to operate freely. By moving cardholders out of protected consumer credit cards and into professional cards, banks might recoup some of the revenue they have lost.

“By pushing professional cards to consumers who otherwise wouldn’t want them, card issuers can get around some of the provisions of the Card Act,” says Josh Frank, a senior researcher at the Center for Responsible Lending, a consumer group.

Several solicitations from J.P. Morgan Chase & Co. have ended up in the mailbox of John and Gloria Harrison, a retired military couple who live in Destrehan, La., outside New Orleans. Mrs. Harrison says she gets an offer for an Ink From Chase card, geared toward small businesses, almost every month. She says she finds this puzzling because her husband retired in 1986 and doesn’t own a business.

…

While the Card Act bars issuers from raising rates on existing balances unless a cardholder is at least 60 days late with a payment, there isn’t any such prohibition on the Ink From Chase card, one of several business cards offered by the bank. The card agreement says Chase is free to implement a default rate of 29.99% if a customer is late by just one day on a payment.

Chase’s Ms. Rossi says its small-business credit cards have “added benefits and features designed specifically for small-business owners.”

Holders of Capital One’s Business Platinum Card, meanwhile, can see their low introductory interest rates spike if they are just three days late with payment in a 12-month period, far less than the 60-day notice period required under the Card Act.

Capital One has “voluntarily adopted many of the Card Act provisions for our small-business customers,” says Pam Girardo, a spokeswoman for the bank. “In order to be able to offer lower rates and expand access to credit for our small business customers, we will continue to exercise risk-based repricing.”

Card issuers also are tinkering with the way they credit payments to professional cards. The Card Act stipulates that issuers must apply payments in excess of the minimum to the balances with the highest interest rate. But on Citibank’s Citibusiness card, payments are applied to low-rate balances first—making it more difficult for cardholders to reduce their more expensive balances.

Card issuers are easing their application requirements for professional cards, too. In July, for example, Chase sent out an offer for an Ink From Chase Cash Business Card that required much less information than earlier offers.