Beware of credit-card penalty box.

• Author: Schwab, Robert
• Position: On Colorado - Column

LAST MONTH, I WARNED OUR SMALL-BUSINESS OWNER/READERS to bulk up on cyber security even though it might cost you some money. This month, I want to caution you to keep your credit-card accounts lean, because, unless you read the details of your card agreements, the companies that run the cards may have a few nasty surprises for you as the economy tightens up again.

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I speak from experience; not as a business owner, but as a consumer. Bank of America two months ago put my card into a "penalty rate," charging me 31.74 percent on the balance, which, I admit, was way too large.

When I asked about it (twice), I was told by two customer service representatives that notice of the procedures that put me into a "penalty rate" was clearly spelled out in the card agreement that comes every year, and, indeed, notice that I was going into the usurious rate was also noted on my statement two months ago when I was first charged the high rate. They also told me I would have to pay the rate for six consecutive months before escaping the penalty box and getting back to the normal 12 percent.

I, being a business reporter and realizing that I had read numerous times in a variety of forums that you can often negotiate your way to more favorable rates from credit-card companies, asked to speak to a supervisor. Twice I was told one would call me back, but no one ever did. So I decided to write this column and started calling Bank of America public relations people that companies like B of A make available to reporters like me to see what I could find out about the credit-card unit's policies.

I also started the effort because I read May 25 in the The Wall Street Journal that credit-card companies were facing a strange dilemma. "The credit-card industry has a problem," The Journal reported. "Although Americans are deeper in debt than ever, they are paying off bigger portions of their monthly credit-card bills. For card issuers, which profit by collecting interest on unpaid balances, that's bad news."

Maybe it's because I've recently filed an application for a trade name, but I have also of late been receiving credit-card solicitations for "business credit cards," rather than consumer cards, which used to come in the mail three days a week. The Journal's story mentioned that one large national bank was planning to counter the lost profits it was taking from higher payment rates by offering more products to businesses.

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