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NEWS�� Latest�|� Archives�|� Auto�|� Cells, etc.�|� Computers�|� Financial�|� Health�|� Homeowners�|� Parents�|� Privacy�|� Scams�|� Seniors�|� TravelAdvanta Closes Customers' Credit Card AccountsAnalysts: company under severe financial stress May 26, 2009 � Two Illinois Banks Fail � Two More Banks Fail � FDIC Warns It's Running Out of Funds � Oregon Bank Fails; No.

14 This Year � Four More Banks Fail � FDIC Closes Three More Banks � Feds Seize Mortgage Lender IndyMac � FDIC Seizes West Virginia Bank, More Likely to FollowAdvanta is freezing the accounts of nearly one million credit-card holders, most of them small businesses and self-employed professionals, effective next Saturday.

The company said it is trying to cut its losses and preserve capital.An email sent to Advanta clients said: 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.

The email said customers would not be required to immediately pay off their balance and could continue making payments under the terms of their agreement.Industry analysts called the move unprecedented and said it indicates the company is under severe financial stress.

The move was described by industry analysts as unprecedented and indicative of severe financial stress.

Earlier this year, the Philadelphia-area company eliminated 300 jobs, or a third of its workforce, and cut its dividend 88 percent.

It lost $75 million in the first quarter of this year, compared with a profit of $18 million in the same quarter last year.Advanta said its customers defaulted last month at a rate of 20.15 percent, compared with 17.31 percent in March.

Outstanding credit-card balances at the end of April were $4.5 billion.

The company hopes customers will pay off their balances, but it is not clear what business Advanta will have left after that.The disclosures came in a regulatory filing by the Advanta Business Card Master Trust, which bundles Advanta's small-business loans for sale to investors.

Customers have been complaining for months that Advanta has raised their interest rates without warning and, in some cases, closed their accounts or reduced their credit lines."Advanta raised my annual percentage rate from 19% to 38% after I had used the card and would not provide any detailed explanation for why they took this action," said Matt of O'Fallon, Mo.

"They have lowered my credit line now to $2800 and I'm sure once I submit the payment in full they will cancel the card.""I have had perfect credit and Advanta still managed to raise the interest rate to 37.99% and it was impossible to talk to anyone who spoke good English," said Dick of Appleton, Wis.

"I made offers to pay them off, took bank loans to pay them off, was still overcharged and the rate jacked up for no reason."Report Your ExperienceIf you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it.

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