Advanta Settles with The FDIC Over Fair Trade Violations

Advanta Business Credit Card

Here's some good news for all those who used to have an Advanta business credit card account. As you may already know, Advanta shut down all business credit cards accounts on May 30, 2009. No account was spared. Small business owners who relied on their Advanta credit cards to buy equipment, inventory, etc. were forced to find new sources of temporary financing in a hurry. This, of course, made lots of cardholders very angry, since business credit cards and lines of credit are not easy to find in the current credit crunch and recessionary economic environment.

To add insult to injury, Advanta also raised the interest rate on many accounts without providing fair warning. This happened with my own Advanta Platinum Businesscard account. Advanta ended my 0% intro APR period early, and without warning. Moreover, I'm still calling Advanta every week, as I'm trying to resolve a problem with an opt-out correspondence. All very vexing stuff.

So here's the good news: Advanta has settled with the Federal Deposit Insurance Corporation (FDIC) over fair trade violations related to business credit card accounts. Bottom line: if Advanta modified your interest rate without fair warning, you may eventually receive a restitution payment.

Here's a clip from Wednesday's press release:

"...Under the settlement, Advanta has agreed to an order to cease and desist, to pay restitution, and to pay a civil money penalty in the amount of $150,000. In addition, restitution of approximately $14 million will be paid to businesses that used Advanta's Cash Back Reward program and $21 million to accountholders whose accounts were repriced. In agreeing to the issuance of the order, Advanta did not admit or deny any liability.

Advanta's 'Cash Back Reward' program advertised a percentage of cash back on certain purchases by business credit card accountholders. Due to the tiered structure of the cash back payments, however, the advertised percentage was not available for all purchases. As a result, it was effectively impossible to earn the stated percentage of cash back reward payments. The FDIC concluded that the Bank's solicitations were likely to mislead a reasonable customer and that the representations were material and that therefore, the Bank engaged in a pattern of deceptive acts or practices in violation of Section 5.

In addition, numerous complaints were filed regarding Advanta's substantial annual percentage rate (APR) increases on the accounts of small business owners and professionals, who had neither exceeded their credit limits nor were delinquent in making payments on their accounts. The FDIC determined that Advanta's rate increases had been implemented in an unfair manner, that Advanta failed to adequately notify accountholders that their APR had increased, the amount of the increase, the reason for the increase, the procedures to opt-out and the consequences of an opt-out. The repricing caused substantial injury to customers, withheld and/or provided inadequate information that could have enabled the customer to reasonably avoid the injury, and provided no benefit to the customer or competition.

'The Advanta settlement demonstrates the FDIC's commitment to having banks take responsibility for ensuring that they do not engage in unfair or deceptive acts or practices in connection with the banking products and services they offer,' said FDIC Board member Thomas J. Curry. 'Any person doing business with an insured depository institution can expect to be treated fairly, and any such entity that engages in unfair or deceptive acts or practices should be aware that the FDIC will pursue such practices with all of the legal authority at our disposal.'..."

OK, so here's an example of one of the worst credit cards ever:



Yup.

I now pose this question to readers: is Advanta the worst business credit card bank ever? As always, your comments are very welcome, and appreciated.

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Advanta Will Close All Business Credit Card Accounts on May 30

Advanta Business Credit Card

The outlook for domestic and international financial systems and institutions appears to be improving, as evidenced by new record lows for the 3-month London Interbank Offered Rate (LIBOR) and a narrowing TED spread (for more about the TED spread, click here.)
But one could argue that the improvement in interest rates is not a good indicator of the health of banks. Low, short-term interest rates, one could argue, are more a result of dramatic rates cuts and quantitative easing by the Fed and other key central banks across the industrialized world than they are the result of banks' improved condition. Yes, short-term rates are extremely low right now, but banks are still failing at an alarming rate. In fact, in the United States, there were 8 bank failures during April 2009, and 7 more have failed so far this month.

Advanta Will Close All Business Credit Card Accounts on May 30

Advanta, a bank that specializes in providing credit cards to small businesses, recently announced that the company will close all business credit card account on May 30, 2009. According to the Advanta's Account Closure FAQ page, May 29, 2009 will be the last day that Advanta business card holders can use their account to make purchases. Also from the FAQ:

• If you plan on opening another business credit card account to help fund your operations, don't look to Advanta for a new account. The company is not accepting new credit applications. If you're worried that your credit score will be adversely affected by the reduction of available credit, or you simply need another card to use for temporary financing, other major banks like PNC, Citi®, Bank of America and Chase are still offering business credit cards. Also, look out for snail-mail business credit cards offers. These so-called "pre-approved" offers usually have slightly better terms, conditions and rewards than their online counterparts; if you are going to apply for a new business card, you might as well go for the best possible deal.
  
  An excellent alternative to getting another business card is to get a small business loan via a peer-to-peer lending site like Prosper.com, VirginMoneyUS.com or the popular Prosper.com.
  
• Advanta's online account management system will continue to function after May 30. The company has no plans to remove or limit cardholder access to transaction data. Customer service will also be available after May 30.
• Advanta accountholders will not be forced to pay their entire balance on, before or after May 30. Accountholders will still be able to pay down their account over time, according to the terms and conditions associated with each account.

Here a clip from the email Advanta sent out to business cardholders today:

"...Your Advanta Business Card account is funded by an independent trust which owns the balances you owe on your account and provides funding for new transactions. We expect the trust to stop funding activity on our accounts. The trust also restricts our flexibility to fund activity on your account. Unfortunately, as a result, effective May 30th all Advanta Business Credit Card accounts, including your account, will be closed.

This means that you will not be able to use your card or account for new transactions, including purchases, checks and balance transfers beginning on May 30th. We understand that you may have written checks on your account before May 30th and we will make every effort to honor those checks that are presented to us for payment by June 3rd. If you use your Advanta card to make automatic recurring bill payments, you will need to make alternative arrangements for those payments promptly.

It is important to understand that you are not required to pay your entire balance at this time. You may continue to pay down your account balance over time, as allowed under your Advanta Business Card Agreement.

You will not lose the rewards that you have earned. If you participate in a Cash Back program, you will receive a check for the amount of any accrued rewards more than $1.00 as long as you make the required minimum payments and your account remains in good standing. If you participate in a Business Rewards program, you will have at least 60 days to redeem your points as long as you make the required minimum payments and your account remains in good standing.

We deeply regret the impact this action will have on your business and very much wish it was not necessary..."

Advanta did not apply for any TARP funds, but, maybe it should have. The lion's share of the company's revenue comes from it's credit card business, and the company recently reported that delinquencies have doubled year-over-year. Right now, you can buy shares of Advanta (trading on the NASDAQ exchange with symbol ADVNB) at $0.79 a piece. A year ago, the stock was trading at $7.60 per share. Two years ago it was trading at $25.68 per share.

How This Advanta News Has Affected Me

I liked my Advanta Platinum BusinessCard a lot when I was enjoying a 0% introductory APR, and continued using it sporadically when the intro period ended and my purchase rate jumped to 7.99%. I was using this card to fund a new business venture.

Last month, Advanta gave me an ultimatum: you can either continue to use your card and accept a 17.15% interest rate, or we will close your account and let you pay down your balance over time at 7.99%. I was given a month to make up my mind. 17.15% is a subprime rate, and I'm not a subprime borrower, so I chose to opt out of the new terms. I did not want to disrupt my cash position by paying the balance down to zero right away, so I chose instead to transfer the balance to a feeless balance transfer American Express consumer card.

Some months ago, both my CitiBusiness and Chase business credit cards were closed (you can read about it here), and now my Advanta card is gone. I'm now left with two business credit cards, and both are from Bank of America. I received a snail-mail offer for a Bank of America Business MasterCard® last week, and since the terms appear reasonable, I've decided to apply for this card.

I am hoping banks stop closing accounts and cutting credit lines soon, because, to be perfectly honest, I am really getting tired of this game.

For more on this Advanta news, check out this Consumerist.com article. You should also check out the content and comments at this article.

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Chase "Forces" Me to Close My Favorite Business Credit Card

It's the old credit card bait 'n switch. The credit card banks bait you with attractive terms and generous rewards programs to get you to signup. Then, they wait. They wait for you to accumulate a large enough balance, then jack up your interest rate. I've been reading about this a lot on other websites recently; now it's happened to me, with my Chase business credit card.

Just got a snail mail notice from Chase informing me that the company is going to raise the interest rate on my favorite business credit card, from a fixed rate of 9.9% to a variable rate of (Prime + 11.99%) = 15.24%. 15.24% is now the interest rate floor for this card, since Prime is not likely to go any lower. Of course, I have the option to opt out of the change. This would cause my account to be closed, and I would then continue to pay the balance down to zero at the original 9.9% APR.

Thankfully, I'm prepared for this contingency. I plan on paying the balance off with some cash from savings and a small loan via Lending Club


I don't have to borrow any money via Lending Club to payoff my Chase business card, but I really like the idea of Lending Club -- bypassing the banks and borrowing from regular folks across the country -- and I want to go through the process of borrowing through Lending Club myself so that I can report on my experience here in this blog.

To be perfectly honest, I really like my Chase business card, but, clearly, it's time for us to part ways. With the U.S. Prime Rate at 3.25%, any rate above 10% is a subprime rate, in my opinion, and I'm not a subprime borrower. I took advantage of an excellent 0% intro APR offer with this card, and, when the 12-month, interest-free period ended, I used the cash back rewards program to lower my cost of borrowing to a nominal level.

I really like the cash back rewards program with this card. I spend money on it and reward points accumulate. Then, when points reach a certain threshold, I simply login to my account and request a statement credit. With a few business days, the statement credit is posted to my account. Easy. No forms to fill out, No waiting until the end of the year to get my cash back reward and no waiting for a snail mail check. I will miss this rewards program.

I have to hand it to Chase for being honest. In the change of terms notice they sent, they explained the change as a, "response to market conditions," and they also added that the company wants to "maintain profitability." I'm hating the change but I respect the honesty. Contrast this with the Barclay's notice I received when that credit card bank closed my BJ's Visa Card. The company wrote that it was to, "...help [me] better manage [my] credit accounts..." In other words, not only did they close my account without consulting me first, they also felt it necessary to insult my intelligence.

In other business credit card news: Citi® closed my inactive CitiBusiness® card recently. I will miss this card because:

• it had a decent credit line (~$10,000) which enhanced my business's credit profile, and
  
  
• the account was aged which, again, contributes to my business's credit rating. It was my first business credit card.
  

So now I'm left with 3 business credit cards: two from Bank of America and one from Advanta. The Advanta card is about to be anointed as my "goto" card, because I'm still enjoying 0% intro APR on purchases, and the purchase APR will jump to a somewhat reasonable 7.99% when the interest-free period ends . I have been reading some horror stories about this particular Advanta business card (unwarranted rate hikes), but so far I've all is well. If Advanta tries to pull some funny business by raising my rate, I'll just pay the card off (my credit limit is under $3,000, and my balance isn't anywhere near that.)

As a final note: it's really no wonder that American Express is consistently rated as the best credit card bank. Right now the company is offering some high-risk cardholders a $300 payment (in the form of a prepaid gift card) in exchange for these accountholders paying their balance down to zero within a certain timeframe, and closing their account. Now that's my kinda' credit card bank!

NB: In that same JD Power & Associates Credit Card Satisfaction Study(1), Discover Card placed second.

Chase, on the other hand, has identified certain credit card accounts that may be at risk for default, and has responded by imposing a $10 per month fee. Yikes! I'm not a public relations professional, but I do have some sage advice for JP Morgan Chase CEO Jamie Dimon: stop doing that!

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No Preset Spending Limit with the Advanta Business World MasterCard®

We've added the Advanta Business World MasterCard® to our lineup of recommended business credit cards. This card does not come with an attractive 0% balance transfer offer, and it the purchase APR is currently 16.99% (indexed to Prime.) So why do we like this card?

Because for certain individuals this card could be a very nice fit. Those small business owners who pay their credit card bills in full each and every month -- thus avoiding any finance charges -- will almost certainly find the "no preset spending limit" aspect of this card attractive. This card is very unique: it's a credit card with no preset spending cap. Usually, only charge cards like the Gold Card from American Express card have no preset limit.

Here's a clip from the Advanta Business World MasterCard terms and conditions:

"....Because your account has no pre-set spending limit, we may permit you to incur charges that cause your balance to exceed your revolving credit limit. We may evaluate each such charge based on your account performance with us and your experience with other creditors. Any amount that we allow you to spend above your revolving credit limit will be due in your next statement, but we will not charge you an overlimit fee. All rates, fees and comparisons are valid as of April 1, 2008 but not necessarily thereafter. You should consult your tax advisor as to the proper tax treatment and deductibility of any business expenses, including the cost of credit..."

No need to worry about being charged an over-your-credit-limit fee, ever. But, if you do go over your credit limit, be prepared to pay whatever amount you go over when your next statement arrives. If you want to spend above your limit but Advanta decides not to permit the overage, the charge will be declined.

Interested? Click here to apply.

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Help Entrepreneurs In Developing Nations Thrive with The New Advanta Kiva Business Credit Card

Advanta has just introduced the new Kiva business credit card. What's so special about this new Kiva card? Well, if philanthropy is your thing, this card might be just the right fit for you. That's because, as a Kiva BusinessCard accountholder, anytime you make a grant to Kiva.org using the Kiva card, Advanta will match the grant -- dollar for dollar -- up to $200 per month. Your grant will help entrepreneurs in developing nations.

Microfinance is a beautiful thing. A small donation can make a huge difference to a struggling entrepreneur in a relatively poor country. The future of philanthropy is in microfinance, in my humble opinion. Handouts can help deserving recipients temporarily. A grant to an entrepreneur, on the other hand, will not only improve that business owner's life, but also his family and his community.

The annual percentage rate (APR) for purchases with the new Kiva card is a very competitive Prime + 2.74%, which adds up to 7.99% at the time of this posting (NB: the index never drops below 5.25% for this card, no matter where the Prime Rate is.)

You can transfer a credit card balance at 0% Intro APR and the interest-free period will last 15 months! That's pretty darn strong. If you don't payoff your transferred balance by the time 15 billing cycles are up, the "goto" APR will be 7.99%, which is also very competitive.

A couple things I should point out before you decide to take the plunge:

• From the terms and conditions:
  

  
  "...Balance transfers must be from another business credit account..."

  
  
• Again, from the terms and conditions:
  
  

  "...Finance charges on balance transfers and cash advances begin to accrue on the date we process the transaction..."

Visit www.kivab4b.org for more info about how the Kiva program works. You can also visit the blog at www.b4bcommunity.org for the latest Kiva-related news.

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New Card Added: The Advanta Platinum with Rewards Customized BusinessCard

Advanta Business Credit Cards

We've just added the Advanta Platinum with Rewards Customized BusinessCard to the list of card we recommend at this website. We like this card a lot, not only because it's cool, but also because it comes with some very competitive terms and conditions.

Why is this card cool? Because, as far as we know, it's the only business credit card in the American market that you can customize with your own logo or a favorite image, and/or have your company name emblazoned with bold lettering at the top of the card.

If you want to transfer a balance to this card, you'll have to pay a balance transfer fee, but this downside is very well balanced with the upside of a 0% introductory APR on balance transfers for 15 months. Very competitive indeed.

And that's not all. The APR on purchases is a very competitive Prime + 0.24%. Now, it should be noted that the purchase APR cannot go lower than 7.75%, no matter how low the Prime Rate falls (Prime is currently at 5.25%, and is likely to be cut again on April 30.) A Clip from the terms and conditions:

...Your account rate for Purchases will be Prime plus a Purchase Margin of 0.24%...Your Variable Rate Index for any billing cycle will be chosen by us from among the Prime Rates published in The Wall Street Journal's "Money Rates" section during the three (3) months prior to the month which contains that cycle's Billing Cycle Closing Date, but will not be less than 7.75%...

Bottom line: despite these somewhat convoluted APR terms for purchases, the introductory and purchase APR's associated with this card are still excellent.

Other powerful features of this card:

• Choice of 5% Cash Back or Travel Rewards
  
  
• No Annual Fee
  
• No Limit on the Total Rewards you can earn
  
  
• $0 Fraud Liability

If you end up with this card in your wallet, feel free to revisit this blog entry and post your comments here. Thanks!

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I Paid A Fee, Willingly, for Transferring A Credit-Card Balance

Balance Transfer Fee

For obvious reasons, the most popular credit cards recommended at this site are those which offer a 0% intro APR on balance transfers for at least 6 months and don't charge a fee for transferring balances. So you may find it surprising that recently, I willingly paid a fee to transfer a balance, even though I could have easily qualified for a quality credit card that doesn't charge a fee for the privilege.

The reason I willingly paid a fee? Because, in my situation, it was worth it.

My business credit card debt was a bit high for my tastes (~$7,000) and, even though I could have paid the balance down to zero within 2 billing cycles, I wasn't interested in using up a large percentage of my free cash to clear the debt. The best solution, I thought, was to transfer the balance to a new business credit card with an attractive balance transfer offer and the best possible, fixed "goto" rate, then pay down the balance over 4 or 5 billing cycles.

I chose to transfer my business credit card balance to the Chase Premier Cash Rebate card, and I did so via an unsolicited offer I received in the mail! Critical offer details were:

• 0% Intro APR on new purchases, balance transfers and balance transfer checks for 12 months.
• Purchase APR (the "goto" rate) of 9.99% fixed.
• Balance transfer fee: 3% of transaction, with a minimum of $5 and a maximum of $99.

Here's why I chose this card:

• I've been yearning for a business credit card with a low and fixed interest rate (my idea of low is below 10% APR) for many years now. I like business credit cards because they afford me an attractive level of anonymity when I do business and shop online, and because they really do a great job of building the credit rating of my business. I applied for a similar Chase business credit card about 2 years ago, and that application was rejected even though my personal and business credit rating was good. I was disappointed, but not totally surprised by the rejection, because banks are very careful when it comes to business credit cards (unsecured debt) that have a very competitive interest rate.
• Even though I really don't like the idea of responding to unsolicited mail (the idea is anathema to me, almost as bad as responding to a spam email message, in my opinion), I had to make an exception for this card. As soon as I received the latest iteration of this particular offer (I get unsolicited business credit card offer from Chase about once per month!) I scoured the Internet to see if I could find the same deal online. I failed. The lowest goto APR for a Chase business card I could find online was 11%, and that was variable. I already have a business credit card from both Citi and Bank of America. I used to have a Capital One Business credit card, but I canceled it long ago because the credit line was wimpy ($500) and they wouldn't increase it. The Advanta Platinum Business Card with Rewards Options card was very, very tempting, with a 0% intro APR on balance transfers for 16 months, and a goto APR of Prime minus 0.26%, but the goto APR is variable, and there's no 0% intro APR for new purchases.
  
  Bottom line: big credit card companies often reserve the very best offers for the solicitations they send out to well-qualified, prescreened consumers.
  
  Actually, what I hate most about those wasteful credit card solicitations is the fact that they are the reason why identity theft is so prevalent these days. Many banks like to cast a very wide net so as to generate as much business as they can, but this tactic ends up making it easy for the crooks to get hold of our sensitive information. You can elect to opt out, of course, but I choose not to, because these offers are often the best deals around. So, yeah: I have a true love/hate relationship with unsolicited credit card offers. Of course, I have a very powerful and efficient shredder, so I can shred all the discarded offers 10 at a time.
  
  I sometimes wonder: if my mailbox was on the street and easy to access, would I be wrestling with a serious identity theft situation right now? It's the stuff of nightmares!
• After years of taking advantage of 0% deals in my never-ending quest to pay as little interest as possible, I now find myself loaded up with more personal credit cards than I need, and I don't want to add another personal card to my collection. Furthermore, canceling one or more of them would likely cause my personal credit score to drop, and I don't want that. I've worked hard to eliminate my personal credit card debt and simultaneously get my credit score to a happy place (my TransUnion score is 813 now) and I don't want to do anything to mess it up (I'm planning on buying some property in the not-too-distant future.)

So, as of right now, and thanks to a recent credit line increase on my Citi® Business card, I have $40,000 of unsecured credit available to me for business spending. Furthermore, I now have a business card with a low, fixed APR that I can use for all my temporary financing needs. So I am quite pleased...for now. Depending on how things go, I may signup for that sexy Advanta card in the future.

If you like 0% offers, then check out those unsolicited snail-mail offers at least once in a while. And make sure you have a good shredder.

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A New Business Credit Card from Advanta: The Life-of-Balance Platinum Business Card

Advanta business credit cards

Most consumer and business credit cards are indexed to the U.S. Prime Rate, which means that the Prime Rate is used a base or foundation rate for determining a credit card's annual percentage rate (APR). Finding a credit card with an APR that's close to the Prime Rate is not easy; finding a credit card with an APR that's lower than the U.S. Prime Rate is very rare.

So it's no surprise that we've been recommending the Advanta Platinum Business Card with Rewards Options for many months now: the APR is Prime minus 0.26%, and you can transfer credit card balances and pay no interest on the transferred balance for 15 months. It's a hot offer, but make sure your credit rating is up to snuff before applying, because with an APR below Prime, you can be sure that the folks at Advanta will be selective.

Advanta's New "Life-of-Balance" Platinum Business Card

We've added a new Advanta business card to the site. We like Advanta's new "Life-of-Balance" Platinum Business Card because the APR is quite competitive at Prime + 1.74%. But we really like the fact that you can transfer other credit card balances to this card at 2.99%, and the APR associated with the transferred balance will stay at 2.99% until you pay the transferred balance down to zero (you have to initiate the balance transfer within 3 months of opening the account.) The card also features a generous 6% cash back rewards program, or, if cash back isn't for you, you can choose to take advantage of travel rewards.

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Advanta Platinum Business Credit Card Tops Competitors As The Business Credit Card with the Best Annual Percentage Rate (APR)

The latest news from the front of the business credit card wars is that The Advanta Platinum BusinessCard tops competitors as the business credit card with no annual fee that has the lowest annual percentage rate (APR): The Advanta Platinum BusinessCard currently has a fixed APR of 7.99%, and also makes its competitors green with envy by adding a 5% travel or cash back rewards program and a 0% APR on balance transfers for an extraordinary 15 months!

Right now, the average business credit card has an APR of 9.91%, and the average business credit card with rewards has an APR of 11.37%.

Click here for more information about the Advanta Platinum BusinessCard.

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