B of A Says Main Street Use of Credit Cards for Financing Decreasing 

March 17, 2025

Bob Coleman
Founder & Publisher

Main Street Monday — B of A Says Main Street Use of Credit Cards for Financing Decreasing 

“However, in our view, pressure on credit card usage might ease as credit availability improves and interest rates fall. Additionally, loan payment growth, after being largely negative the past year, is starting to increase and outpace credit card payment growth for small businesses. This further suggests small businesses may be rotating back to bank financing as they anticipate further rate cuts.”

The February 2025 Bank of America Small Business Checkpoint Report says this contrasts with two years ago when small businesses were moving from bank loans to cards, partly reflecting tighter credit requirements from lenders. 

“Indeed, according to the NFIB, a net 3% of owners reported in February that their last loan was harder to get than a previous one. Additionally, this percentage was the lowest since June 2022.

What are small businesses spending on? Looking across credit card categories, much like consumers spending on services has outpaced retail.

In January, services spending for such clients rose 1.5% year-over-year YoY, whereas retail fell 0.3% YoY.

Using Bank of America internal account data, the number of credit card transactions per small business client has fallen across all revenue tiers since 2022 (Exhibit 9). For small firms with annual revenue of $100K-$500K, transaction growth has increased from the prior two years, while firms with annual revenues of $500K-$1M and >$1M have seen consistent declines. 

“Furthermore, the rise in small business credit card balances has stayed below the rate of inflation.

“However, despite interest rate cuts from the Fed, banks tightened their standards for households and businesses in the fourth quarter, according to the January 2025 Senior Loan Officer Opinion Survey. Small businesses entered 2025 with significant momentum, but if credit tightening increases, this could create obstacles for growth in the future.”