In a last-ditch bid to survive the economic downturn, Advanta Corp. (ADVNB), the nation’s 11th-largest credit-card company with about $5 billion in outstanding balances, announced today that it is closing its small-business customers’ credit cards to new charges after June 10.
From Bloomberg: Advanta Corp….may leave 1 million customers scrounging to find new lenders and debt holders facing losses of 35 percent after the company shut down accounts to preserve capital.
Advanta will cease lending June 10 after uncollectible debt reached 20 percent as of March 31, according to a statement and filings yesterday by the Spring House, Pennsylvania-based firm.
Advanta decided to cut off customers after “charge-offs” rose to twice that threshold, from 9.6 percent at year-end.
“We’ll be shutting down accounts for future transaction activities, but many of the customers will maintain balances and pay us off over time,” Co.’s CFO Philip Browne said yesterday in a telephone interview.