The Federal Reserve received around 56,000 responses from angry credit card customers with regards to the new rules it proposed against abusive credit card practices. The rage over arbitrary hike in interest rates based on factors apart from the consumer’s credit history is apparently pretty wide spread.

A long list of factors is contributing towards making unethical or usurious practices in banking industry the norm. The consumer rights bill sponsored by House Financial Services Committee Representative Carol Mahoney moves toward preventing credit card companies from arbitrarily raising interest rates on a balance incurred under an old rate or for unrelated reasons.

One of the major factors motivating abusive lending is the trend of larger and larger corporations. The big banks such as Bank of America, Citi Group and Chase that issue most of the credit cards can take credit risks and absorb the damage in the form of spiked interest rates and sale of bad debts.

Another factor is the focus of the company management solely on meeting the expectations, unrealistic as they may be, of the stock holders who pay them. The interests of the customers are being compromised for increased ROI’s and salaries of the upper echelons.

Not to entirely absolve the consumers and the government, the practice of encouraging expenditure in the absence of liquidity with unsecured credit cards has ruined all hopes of economic stimulus through conspicuous consumption. These lead to abusive lending practices which is another source lost for ready cash like the time when the subprime mortgage crisis hit us.

So, credit card reform is most definitely overdue but first and foremost we need a pool of people who make enough money to cover their basic needs and still have some left to spend on consumer goods. These will require some systemic changes that cannot be accomplished without bloodshed.

The bill is a good start to all of this, but the banks are ferociously fighting the bill, despite its fairly modest restraints. This resistance by the industry makes me wonder- “Has the banking industry completely lost whatever moral compass it might once have possessed?”

The problem has been long coming with a large percentage of Americans paying their credit card bills late or never paying them at all. The small businesses which rely on credit to pay their bills are suffering the brunt of this lax.
The Federal Reserve has planned to revise the credit card rules and are clamping down on credit lines. The Feds said the cause was “tight credit conditions” which clearly implies that we are still very much assailed by the liquidity crunch.
There are indications that some investors have soured on a kind of bond backed by credit card debt. Considering the past of the U.S Financial System the Feds have taken steps to make the credit card securitizations safer as per the Wall Street Journal. Such conditions in the credit card market are forcing banks to tighten their lending standards. Banks currently have fewer resources to make loans on credit cards or carry out large balance transfers.
The ripple effect of this cut down is affecting small businesses and taking away the advantages they have for expansion, categorization and tracking by using business credit cards. Todd McCracken, president of the National Small Business Association said on MarketPlace Radio that apart from high interest rates, using credit cards to fund their businesses carries other risks.
The sudden rise in interest rates can create chaos for small businesses trying to make payroll. The current policies are going to do them a world of harm.

A new business setup can get extremely chaotic and overwhelming for you. It is a little while before you can establish yourself in the business world when, it will become easier to understand how to do things the right way the first time around.
Credit cards specifically meant to help small businesses succeed are one way to ease the chaos. The advantages of a business credit card are numerous.
Business Line of Credit
The business credit cards have a higher line of credit than consumer credit cards . This helps free up some of the company’s financial resources so long as they pay the balance due each month. Using a credit card responsibly could ease your concerns until you begin to regularly make a good profit. Unexpected expenses can be absorbed without major repercussions.
Tracking Expense
Keeping track of all the company expense becomes much easier if you utilize one single credit card for all your company expenses. Some business credit card  companies also provide the facility of categorizing your business expenses making it convenient for purposes such as calculating the company tax and reviewing your initial business plan.
Establishing a Solid Credit Foundation

A good credit history abets the process and plans for future expansion that you may have. The privilege of a larger loans being approved may be the very thing you need.