Most CNC shops have one or more credit cards they use to help manage their finances, which makes perfect sense. However shop owners may not be aware that certain safeguards governing our personal credit cards do not apply to the business cards we use. The federal government’s Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) provides a number of protections for consumers against fraud liability, unfair rate hikes, late fees, over limit fees and more, but these safeguards do not apply to business credit card holders.
A few of the more concerning differences are these:
- Interest charges on consumer credit cards cannot be raised in the first year. After that the credit card company must give 45 days advance notice of any interest charge changes. Business credit card issuers, on the other hand, can change rates whenever they desire, with no advance notice.
- Penalties for late payments on consumer credit cards cannot be assessed until the account is at least 60 days delinquent. Business credit card holders can be hit with penalty fees and automatic interest rate hikes if an account is even one day past due. Similarly there are virtually no protections for business credit card holders against other fees and penalties.
- Liability. If a consumer credit card is lost or stolen the CARD Act limits the individual’s liability to the first $50. No such limit applies to business credit cards. Even worse, not only can your CNC shop be held liable for fraudulent use, the owner or other officer who signed for the credit card can be help personally responsible. Considering how many major institutions like Home Depot and Target have been hacked and credit card information stolen, your business credit card could put you at significant risk.
How vulnerable your CNC shop is to any of these dangers depends a great deal on how you use your credit cards. A few common sense precautions can help you limit your exposure:
- Restrict the number of people who have access to the credit cards. The fewer users, the less likely the cards can be lost, stolen or used fraudulently.
- Stay on top of credit limits and due dates so you never have a late or missed payment that could lead to penalties and higher interest rates.
- Only deal with online companies you know and trust.
- If you use credit cards often for retail purchases, consider obtaining a personal credit card so you are covered by the CARD Act for any fraudulent use.
- Monitor your credit card accounts regularly for any strange activity.
Your Torrance Haas Factory Outlet doesn’t issue credit cards, but does offer a number of CNC machine financing options that can help you stay ahead of the competition. Call (310) 381-0750, email: jphillips@haasfactoryoutlet.com, or visit www.haasfactoryoutlet.com.