Advanta Bids Farewell to Credit Card Niche
On June 10th, one million Advanta card holders were be out of luck. That’s when the company, which focuses on small business credit cards, stopped issuing credit for good. This announcement caused Advanta card holders to hurry and redeem their reward points at the last minute. Now many of them are looking for financing alternatives for their businesses.
Advanta’s small business niche has been hit hard by the recession, and the card issuer’s numbers reflect that. Advanta watched its stock shares lose 90% of their value over the past year. With a default rate of 16% – roughly half that of American Express – Advanta posted a first-quarter loss of $76 million. That’s much less than some of the larger firms, but enough to make Advanta pull out of the race.
The credit card industry as a whole has been plagued with record levels of delinquency and default. Advanta is just another casualty of the recession, and probably won’t be the last. Small business owners who loved their Advanta cards must now try to find a replacement. Experts recommend small business credit cards and personal loans, both of which may be easier to obtain through local credit unions during the Recession.
Though credit lines dried up on June 10th, Advanta will continue to accept payments on existing accounts.
