Advanta Business Card / Predatory Practices
We signed up for a 7.99% business credit card. Within a few months of taking out a $25k cash advance at that rate, we were notified of an account modification that, in the words of a customer service rep, was "a slight change to our lending guidelines since your account was established." That slight change was a massive increase from 7.99% to 18.99%.
The letter was dated Feb 29, 2008 (date of letter, not receipt) and the new rate was effective March 20, 2008. The March 20 change was conveniently 5 days before the end of the billing cycle so that Advanta could take advantage of the billing clause that "any change in APR becomes effective as of the first day in the billing cycle..."
Note that this increase in interest was NOT tied to any late payment. This was verified by a customer service rep.
After receiving the letter, I scraped up enough money and paid the balance in full (with an additional $200 paid by a merchant rebate) two days before the March 20, 2008 change. But because I did not send a signed written notice that I rejected the modified account terms, Advanta billed me finance charges for the previous month on the cash balance.
I am so incensed by the massive escalation of interest, the short notice and retroactive finance charges. Obviously predatory practices. I formally told them I would be contesting the $79 left on my balance and to close my account.
We can only imagine how many people they rip off this way. It seems clear to us, they've automated this way of doing business to fleece people who don't rapidly respond to their unethical business practices.
In an e-mail, the customer service rep wrote that the change occured because "Advanta reviews lending guidelines on a regular basis to ensure that they are in line with industry standards and the changing economy." Except they are still advertising the 7.99% rate on their website and mailings. Who do they think they're kidding.
Other ways they fleece customers: "Cash Back Rewards" that aren't credited to your account but sent as cutout checks in sheets of paper behind regular account statements. They realize people, particular ones with online accounts and software, won't open or even notice the checks. So these "void within 90 days" checks will go unused. More profit for Advanta! The envelopes containing these checks won't have any unusual markings and just says "Statement Enclosed." But envelopes that have cash advance checks and other ways to get you in debt have "Inside: Important Information About Your Account" on the envelope. Do you see a pattern here?