Ask The Consumerists: Small Business Credit Cards

We’ve heard from many, many readers who are Advanta cardholders since bringing the impending account freeze to their attention before the company did. Some people are just annoyed. Others don’t know what to do to keep their businesses afloat.

Tom, the owner of a hotel, wrote to us:

Rec’d Advanta’s ltr only this morning (5/26/09). We (immediately) stopped using the card and are simply rolling with cash or business checks. This will be temporarily inconvenient. Our big problem is that many of our recurring monthly & annual bills are pd by Advanta & charged to our card acct. This stop will be a pain because we must track down those vendors…. cancel the Advanta number……… and start with a new acct number from a new account, an account WHICH WE DO NOT YET HAVE. So……… fun & games for the next week. BUT……. how many of our services will be cut off for lack of payment because we slipped up & didn’t update our credit card info with them??????? We’ll find out.

Donna, in the meantime, depends on her Advanta card and doesn’t know what to do without her Advanta card, and isn’t quite sure where to turn.

I am an author / freelance writer with an Advanta Small Business credit card which supports book signings, book festivals, and book development expenses. I had no idea my small business account with Advanta was being closed until I read your article.

Advanta has been an excellent tool for me as a low-budget author because it has allowed me to easily separate my business expenses from my personal budget. I am concerned about where I will find a comparable tool to support my business, my livelihood, and my life. Any suggestions?

Any suggestions for Donna, and the many other Advanta customers suddenly left without a credit card?

Comments

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  1. cmdrsass says:

    Did Tom send his note by telegram? STOP

    • gStein_*|bringing starpipe back|* says:

      @cmdrsass: crackberry?

      • kc2idf says:

        @gStein: Anyone who claims that this is necessary for typing from a crackberry is full of shit. I type full sentences with full words on mine.

        No, I suspect that he has found himself short on credit to buy letters with, but has been able to fluff out his end product with dots, which apparently are far cheaper to produce.

  2. MooseOfReason says:

    Couldn’t they just get a new credit card?

    American Express has a card for small businesses:
    [home.americanexpress.com]

    Visa does too.
    [usa.visa.com]

    Maybe someone could explain the problem?

    • Anonymous says:

      @MooseOfReason:

      We opened a business credit card account with our credit union where we have a business account. We have to pay an annual fee of $35 but no nonsense and a decent rate. From our standpoint, blessing in disguise. We lived in fear of a slip up in the mail, a computer outage or some ill timed issue with paying the bill on time that would result in a change of terms.

      We’re better off without Advanta.

    • zigziggityzoo says:

      @MooseOfReason: Parents both own small businesses, both use Amex and Visa. They, of course, both pay them off at the end of every month, too. I recommend both. :)

    • morgasco says:

      @MooseOfReason: Yeah, that was exactly what I was thinking. I have a Starwoods Preferred Guest AMEX business card, it’s not like Advanta was the only one out there with credit cards for businesses.

  3. zaq2g says:

    I don’t get it, was Advanta issuing cards to those who otherwise couldn’t get a business credit card?

    As a small business owner myself with only one business credit card, I would focus on a short term restructure of my payments:
    1- talk to my supplies to see if arrangements can be made for the next 30 days
    2- switch to checks/cash

    Then find a new card that fit my needs ASAP. There are many other business cards out there from other banks. For those who have automatic payments going out on the card, check your statements from the last 3 months to see who automatically bills you and get in touch with them right away to set up a new payment method.

    Obviously this is a major inconvenience to Advanta cardholders, and bad business on their part for not notifying their customers. To paraphrase John Stewart, Advanta needs to “BE A F@#KING PERSON”

  4. golddog says:

    Firstly, Advanta has been screwing people since the 80′s. They bought Sovran Bank in VA in 1990 or so and immediately bumped my rate to 28.99 as a 2nd class former Sovran red headed step child. You’re better off for the temporary inconvenience.

    Secondly, if you live in the Rocky Mtn region, 1st Bank has been great as my business CC and line. Super flexible on bumping up the limits when need be, and all around low-maintenance. Local-ish people answer the phones when you call and I love that I can roll in to any branch on the day a CC payment is due, pay it, and everything’s good.

  5. Skaperen says:

    If small business cards is all they do, and they are no longer issuing any cards, does this mean they are basically shutting down based on payments of existing balances? What if all the account holders that can no longer use the card decide to just stop paying en masse as leverage to force them to die faster or restore the cards?

    • morgasco says:

      @Skaperen: I mean they could do that, but it’s going to come at the cost of them damaging their credit history therefor decreasing their odds of getting another card all together.

  6. Anonymous says:

    Airline Miles! All 3 of my cards are Citibank AAdvantage Airline Miles (Bus., Bus. Entertainment & Personal). And a mixture (MC, Visa & Amex). I put everything possible on them and pay them all off every month. The miles add up quick. I’ve gone to Cancun and Europe 1st class round trip twice, going to Europe again in a couple of months and then Asia later this year. Almost free plus $85/card per year.

  7. Snarkysnake says:

    Uh , bad news v 2.1 folks…The new credit card law that Obama just signed , the one that stops the bullshit games that card companies play to try to screw you on fees ? Well , all of the protections that that law will provide for consumers will NOT apply to business cards. The bullshit games will continue for the small business guy/gal. So it probably makes no sense to carry a seperately branded card for your small business because you have to sign a personal guarantee anyway to get one.

    Probably better to get a second personal card with a higher limit and use that for business. Ideas ,anyone ?

  8. krunk4ever says:

    I posted a blog post a few days ago suggesting 2 replacement cards:
    [www.krunk4ever.com]

    Assuming you’re still looking for a business card with good cashback/rewards, here’s 2 to consider:

    American Express SimplyCash Card (5% wireless/office supplies, 3% gas, 1% other)
    Chase Freedom For Business (3% on top 5 categories, 1% other)

  9. krunk4ever says:

    @MooseOfReason: I believe the issue isn’t they don’t qualify for a new credit card, but while they wait to be approved or to receive a new card (which may take weeks), what do they tell existing vendors/services to charge their payment to. Of course you can switch back to cash/check which becomes very inconvenient.

    What might work is try calling American Express, get an instant approval, and request for expedited delivery. I know you can do that when you lose a card, but unsure if it’ll work for new applications.

    There might also be services which will give you your temporary credit over the phone/internet (i.e. PayPal). You may have to research a bit more on this.

    Finally, if you just want keep your bills separate from your personal credit card, many credit card services now offer virtual credit cards, which will allow you to set a max credit/expiration date, which would make trackign personal/business purchases separately easier.

  10. jan_itor says:

    For small business owners – this couldn’t come at a worse time. Because of everything happening with the economy and the credit card industry, its a lot harder to open a small business card and get a good line of credit.

  11. sickofthis says:

    As one of Advanta’s victims, I see two issues. First, as a non-profit, it’s a much bigger PITA for me to get a business credit card. They want a lot more paperwork. Second, you may have heard that credit is tightening. It’s not a foregone conclusion that we’ll get a replacement, especially one with as high a limit. I’ve applied for a card from Regions, where we do all our banking, but I’m not counting on getting one.

    • morgasco says:

      @sickofthis: If you think the bank that you do all your banking won’t extend you credit, maybe you should be looking at a bank that values your business more.

  12. zarex42 says:

    Give me a break. If your business is reliant on a single credit card for its continued existence, then you’re going to go out of business soon anyway.

    Simple solutions:

    1. Get another credit card (why do you have only one anyway?)

    2. Use your personal card

    3. Use checks

    This is not rocket science. Sure it’s slightly inconvenient, but welcome to the reality of business. No big deal.

    • PencilSharp says:

      @zarex42: While I don’t normally feed the trolls, there are some flaws in your reasoning:

      • PencilSharp says:

        Stupid CTRL+Q.
        Anyway.
        1. For new small businesses, it’s all about the cash flow. While more established and larger businesses will pretty much always enjoy net 30 terms (essentially a float) on their bills, smaller newer businesses are typically required to pay cash. To get the more favorable terms, they have to use a credit card, where the bank provides their float.
        2. For microbusinesses (usually sole proprietorships), a credit card can help take the place of an accountant. You can easily see how much is being spent on what. Before I get flamed for saying that, I do not recommend running a business without a CPA! But for folks trying to get their biz off the ground where every single cent counts, it is true.

        As for my advice to a small businessperson trying to recover from this: Consider using a local buying club (like Sam’s Club or Costco or BJ’s); they typically have branded small biz cards available if you know where to look.
        Also consider (all together now) your local credit union. They usually have the best rates, and are far more likely to help out local small businesses than the mega-monster-slobber-banks…

        • zarex42 says:

          @PencilSharp: Shame on you for thinking I’m a troll. You weren’t able to refute my main points at all.

          JUST GET ANOTHER CREDIT CARD!

          It’s really not that complicated.

          This isn’t a “recovery” for any small business worth its salt. There are no ‘victims’.

    • christoj879 says:

      @zarex42: I agree. What’s the problem with getting an AMEX gold card and having them overnight it to you/why don’t you already have one?

  13. onereeves says:

    As has been said why do you have only one card? I have two dedicated to business. I also use my personal cards if needed. Particularly my Discover Card when it fits a 5% cashback purchase. Just be sure and keep your receipts and purchases for business and personal seperated. A company accepting CC’s as payment could care less if it is a business card or not.

    I do however always pay of all the CC’s monthly so it comes down to what you would do anyway, bookeeping.

  14. tz says:

    Find credit union that offers credit cards (with or without business account).

    Open account, apply for card (or maybe apply for and use debit card).

    They won’t do the come-on offers (then turn evil like Chase), but they will ask you questions to confirm your creditworthiness.

  15. Ruann Wood says:

    I received the ADVANTA letter on 5/26/09 with the closure date of 5/31/09 but with the card unable to be used past 5/29/09 which messed up several things on my end for this upcoming weekend. Who puts a $1,000.00 damage deposit on their business checking account? Not me for sure!

    I think it was very shoddy business on their end. I have amazing credit as does my small business; however, Capital One gave me the thumbs down without reason (waiting for the letter). So thanks to Krunk I am checking into Chase and American Express Simply Cash.

    I’m already a loyal AE Gold Card user but there are just some things that don’t go on the AE…such as 1,000.00 damage deposits for equipment!

  16. Anonymous says:

    We received Advanta’s “nice” letter yesterday informing us of termination. We have a discover card for business but many of our vendors do not take discover or american express. We pay off our cards every month so hopefully a new visa/mastercard will be forthcoming. We were part of Henry Schein Platinum Business Card and had a good credit line and 7.99% interest. For the dental, medical, and veterinary services.