Advanta Settles with The FDIC Over Fair Trade Violations

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.

--> Business Credit Cards HOMEPAGE <--

Advanta Will Close All Business Credit Card Accounts on May 30

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 industry leader Lending Club.
  
• 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.

--> Business Credit Cards HOMEPAGE <--

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!

--> Business Credit Cards HOMEPAGE <--

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.

--> Business Credit Cards HOMEPAGE <--

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.

--> Business Credit Cards HOMEPAGE <--

New Card Added: The Advanta Platinum with Rewards Customized BusinessCard

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, like this:

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!

--> Business Credit Cards HOMEPAGE <--

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

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.

Click here for the "Life-of-Balance" Platinum Business Card from Advanta

--> Business Credit Cards HOMEPAGE <--

Advanta Will Release A New, Small Business Credit Card with PayPass Technology Next Month

It was back in October of 2005 when we last posted about Advanta business credit cards here at www.BusinessCreditCards.cc. We reported that the Advanta Platinum BusinessCard was, at the time, the business credit card (with no annual fee) that beat its competitors in the lowest annual percentage rate (APR) category.

Today, we have some more Advanta-related news: Advanta will be launching a new small business credit card in September, and it will be the first MasterCard® small business credit card that utilizes the nascent PayPass^TM contactless payment technology.

Some of you may already have a credit card with contactless technology. Basically, the technology works by using a tiny RFID chip that's embedded into a credit or debit card that allows the cardholder to simply wave the card past a terminal to pay for items or services. No contact between the card and terminal is necessary so, as you can imagine, using a card with contactless technology can make for some very speedy checkouts.

I recently got a new Chase debit card that features the Blink^SM contactless payment system; I've used the contactless feature on numerous occasions, as I'm a bit obsessed with efficiency these days. Certain nightclubs in Europe are implanting RFID chips into the hands of their VIP customers. Would I accept an RFID implant if it was offered to me? Probably!

FYI: you can use a PayPass card at a Blink terminal, and vice versa. American Express® has their own contactless system called ExpressPay^SM.

Chase has a cool presentation of their Blink system here.

For more about Advanta's new small business credit card with PayPass technology, here's a clip from today's press release:

"MasterCard Worldwide and Advanta Corp. (NASDAQ: ADVNB; ADVNA), one of the nation's largest issuers (through Advanta Bank Corp.) of MasterCard business credit cards to small businesses and business professionals, announced today that they will begin issuing the PayPass^TM-enabled Advanta MasterCard® Small Business card in September. This marks the first small business credit card to be equipped with PayPass contactless payment technology. This new small business card can help small business owners and business professionals keep track of their business expenses, while offering the speed and convenience of PayPass' 'tap and go' functionality when making purchases at participating merchants.

'The new Advanta MasterCard Small Business credit card with PayPass will deliver immediate benefits to small business owners who routinely find themselves constrained for time and juggling multiple priorities,' said Dennis Alter, Advanta's Chairman and CEO. 'With PayPass their purchasing experience will be quick, easy and safe, allowing them to spend more time focused on their business.'

The new card combines the worldwide acceptance of the existing Advanta MasterCard Small Business card with the added functionality of PayPass contactless payments. This technology allows customers to simply tap their PayPass-enabled Advanta business credit card on a specially-equipped terminal that utilizes a radio frequency (RF) chip to complete their transaction at participating retailers and restaurants. Payment is processed quickly and easily without the hassle of swiping a card, fumbling for cash or signing a receipt. Moments after a customer taps the PayPass-enabled business card, account details are communicated to the terminal and then processed through MasterCard Worldwide's secure network for clearing and settlement.

'When MasterCard developed this technology, its benefits were most easily associated with simplifying transactions for the everyday consumer. But it has become very clear that the small business owner can benefit from PayPass just as easily,' said Ann Camarillo, executive vice president, MasterCard Worldwide. 'Now, small business owners will spend less time standing in line and more time on what it takes to successfully run their business.'

As of Q2 2006, there were nearly 10 million PayPass cards and devices in the market and approximately 32,000 merchant locations around the world that accept PayPass, including McDonald's, 7 Eleven, CVS, Duane Reade, Sheetz and Regal Entertainment Group. Interest in PayPass has not been limited to retail establishments. PayPass technology has proved popular in sports facilities as well, and PayPass is now accepted in many Major League Baseball and National Football League stadiums as well as at numerous golf events.

In addition, Advanta is working with MasterCard to identify the merchants that small business owners do business with in order to grow acceptance of contactless payment cards. The Advanta MasterCard Small Business card includes the traditional magnetic stripe technology and can be used at the over 24 million MasterCard-acceptance locations around the world.

About Advanta

Advanta focuses on the small business market and related community, providing funding and support to the nation's small businesses and business professionals through innovative product offerings and services. Using its direct marketing and information-based expertise, Advanta identifies potential customers and provides a high level of service tailored to the needs of small businesses. Advanta is one of the nation's largest issuers (through Advanta Bank Corp.) of MasterCard business credit cards to small businesses and business professionals. Since 1951, Advanta has pioneered many of the marketing techniques common in the financial services industry today, including remote lending and direct mail, affinity and relationship marketing."

--> Business Credit Cards HOMEPAGE <--

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.

--> Business Credit Cards HOMEPAGE <--