Advanta Bank to close all credit accounts this week
Card issuer catered to small businesses
May 27, 2009 (published)
All Advanta Bank credit card accounts will be closed in four days, the card issuer for small business told its customers Tuesday.
Cardholders received e-mails from the bank notifying them that they would not be able to make new transactions as of Saturday. Those who carry a balance will be allowed to continue paying down that balance over time.
The bank issued a public announcement on May 11 that it would shut down credit card accounts on June 10, but did not communicate that directly to cardholders until this week. Why Advanta has chosen an earlier closure date is unclear. Bank representatives could not be reached for comment Tuesday.
Advanta is the issuer of the Henry Schein affiliate card, held by hundreds of veterinarians. Users of the Schein card receive cash rebates or credits toward airline flights based on their purchases. Other veterinary practice owners hold Advanta cards unaffiliated with Schein. Advanta has about 1 million customers altogether, according to a report by the financial news service Bloomberg.
Schein has not said how it will handle Advanta’s change of fortunes. Keith Drayer, vice president of Henry Schein Financial Services, referred questions to company spokeswoman Susan Vassallo. Vassallo said by e-mail on Friday that there had been “activity” at the company regarding the credit card and hoped to have answers on Tuesday. However, she did not provide any information to the VIN News Service on Tuesday.
Schein and Advanta came under criticism last fall when Advanta began raising rates on Schein affiliate cardholders, including some VIN members, for no apparent reason. One veterinarian in North Carolina, Dr. Carol Tice, who has a good credit record, reported her rate increased from 7.99 percent at the start of 2008 to more than 37 percent 11 months later.
Internet discussion boards besides VIN’s were abuzz with angry cardholders relating similar stories.
A recent Fortune magazine article posted on CNNmoney.com calls Advanta “the credit card company everybody hates.”
A stock analyst who last October had recommended Advanta as a low-priced bargain stock changed his mind in January, according to a blog post on http://www.philly.com, the shared Web site of Philadelphia’s two major daily newspapers.
“The catalyst for our about-face is much-sharper-than-expected credit deterioration in December,” wrote Christopher C. Brendler, citing an Advanta report of rising credit-card delinquencies, according to the post. “... We now believe Advanta will no longer be able to survive.”
Tice couldn’t help but look upon Advanta’s woes as a measure of justice.
“I really hope it has no negative effects on any others that were using their card, but it only makes me smile after what they did to me as well as so many others,” she wrote in a VIN post.
Another veterinarian, Dr. Neal Sivula of Ohio, told VIN News Service that he had a good experience with Advanta. “We used the card for all business-related expenses, which can run between $5,000 to $7,000 monthly,” he said. “We don’t carry a balance, but I just liked using the card and writing one check at the end of the month.”
Sivula said he is fortunate in having other cards with similar credit limits that he can substitute.
But some of his colleagues are scrambling. Dr. Eric Vymyslicky, a practitioner in Indiana, didn’t hear about Advanta’s woes until he received the e-mail from the company Tuesday morning. Because the communique arrived electronically, he thought at first it was fake.
“The first thing I tried to do was to go to their Web site, which was practically down. It took five minutes to load up,” Vmyslicky said.
Once he accessed Advanta’s home page, he saw that the message was legitimate. Now he is trying to find quickly another card issuer who will offer him a comparable credit limit of $25,000. He’s already begun contacting vendors to let them know of his predicament. Most of them, he said, have responded with understanding.
Advanta posted answers to questions about their closure of accounts.