Complaint Review: Advanta Bank

Dear Jim

One of the problems here is if you read closely, quite a few of the complaints, including mine, show they never received any notice that the claim, so they had no opportunity to close their card and pay the balance off at the previous rate. This to me is illegal. They are jacking the rates before you have a chance which is unfair to the cardholder.

DC

Advanta bank's CEO is Dennis Alter. Advanta is headquartered in Bluebell Pa. Advanta's main business is credit cards to small businesses, usually with a very low teaser' interest rate (7.99% in most cases).

Whether or not your credit or payment history stellar or is as agreed, Advanta just raised rates for thousands of customers 3 fold or more-25% is normal, some are now paying 35%!!! Many customers state they have never been late with a payment and have credit scores above 700, considered good to excellent credit.

In addition, Mr. Alter has contributed thousands of dollars to BOTH Barack Obama and John McCain's Presidential campaigns. Mr. Alter also was paid almost $1 Million in compensation plus given large amounts of stock in Advanta this past year, while Advanta's stock has slipped from almost $27/share to around $6-7 presently. These bait-and-switch rate increases, with little or no warning, is impacting thousands of Advanta clients who are small business owners-google "Advanta complaints" and read about it, many state they did NOT receive any written notification of increases (I did not).

This should be exposed, for the greed and unethical practices, and is tantamount to usury or loan shark tactics-I also think the stock holders of Advanta should be aware that there is going to be a serious backlash for these actions.

The Obama and McCain camps can say all they want about 'CHANGE' but both took large contributions from Alter. I'll also add a woman at the FDIC, which regulates Advanta told me they were aware of these complaints, and they were investigating this situation. She said that there was a problem since the company was not utilizing any criteria for arbitrarily raising rates..

The other person who posted on here, saying it is NOT usury, is correct, since laws in the 80's give an almost blanket exemption to CC and loan companies-but that does not make this right, it is greed, pure and simple. If you were or are currently being victimized by the actions of Mr. Alter and Advanta, I urge you to write to news agencies, call legislators, and complain directly to Mr. Dennis Alter (215-657-4000).

I would also complain to the two Presidential candidates who have accepted money from this individual, and, I am certain, this company and it's executives. Banks and loan institutions are destroying the middle class in this country, and, no matter what, PRIOR to this election politicans must be told, in no uncertain terms, that we will not stand for this anymore. The Federal Reserve has given a sweetheart deal to banks in interest rates as low as the current 2%, yet these people are permitted to charge 25-35% interest, all while they send thousands to Senators, Congressmaen, PAC's and Presidential candidates-ENOUGH!

First off, most usury laws in this country have been wiped off the books; in fact Cash advance companies in your state, or operating in your state, can charge an interest rate of up to 99% interest. No state is looking to reverse this trend either.

Next, a credit card company has the right to raise your interest rate for no real reason. The question ultimately is whether you want to continue using the card because when you use it after notification, you're essentially inferring acceptance of the rate. Even with perfect credit.....this can happen.

You did what you should have......

The American voter has reaped what he has sown by voting in Right Wing politicians for the past 25+ years...."Getting big government off our backs" was a bait and switch...it was all about getting the government off the backs of big corporations at the expense of the rest of us....The wealthy of this nation have figured out that the American voters are suckers who can be easily duped into voting against their own economic interests time and time again....It's as easy as candy...by stirring up resentment against [insert group here] blacks, gays, Mexicans....Today's distraction tactic is putting all the focus on the VP nominee to divert attention away from their aged dud of a candidate, John McCain...the "maverick" who has been in Congress 30+ years...but who is really an "outsider" who will "change the way Washington works."

Read the article below for more info on usury laws and why you have little recourse in today's environment.


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Usury laws offer diminishing protection for credit cardholders
By Michelle Samaad Bankrate.com

Usury laws offer little protection Allen Lohn of Rockland County, New York, pulled into a Citgo gas station last winter to fill up his tank. When he went to pay for the gas, there was a Citgo gas card application stand nearby that offered a $3 dollar rebate to those who filled out the form.

Lohn took a few minutes to complete the form and the clerk handed him his $3.

A few weeks later, he got the card along with an insert that listed the maximum interest rates credit card companies in each state can charge. New York's cap was the highest.

New York's laws may change "I wondered why my state had the highest rate," said the retired accountant, who shot off an e-mail to his state representative. He learned via return mail that there is a bill in the works that would cap New York's interest rates at 15 percent. The state's banking board set the current maximum of 21 percent.

The laws that govern these lids are called usury laws. Usury is charging a price for credit that exceeds the limits set by law. But these laws offer less protection than most consumers realize.

"The reality for consumers is unless you get an Arkansas bank card which has managed to maintain its state laws [on fees], you just have to accept the fact that the interest rate and fees are not regulated and they could go up," said Gerri Detweiler, credit educator and author of the Ultimate Credit Handbook. "It's truly a buyer beware (situation)."

Few protections left "There aren't many protections left for the consumer and it's frustrating for consumer advocates, who are trying to level the playing field," she added.

Some states don't have usury caps, and in those that do, federal law usually supersedes state law when it comes to setting rates and fees.

This trend began in the late 1980s. Most big banks packed up and moved their credit card operations to "debtor-friendly" states such as Delaware, said Steven Palmer, managing partner and a specialist in usury law at Palmer, Allen & McTaggart, a corporate law firm in Dallas.

The lure was "being able to charge higher fees," Palmer said. "When some of the banks left Texas, several of the credit card operations were spun off. Mercantile National Bank became Mcorp and they transferred to Wilmington, Delaware. That became Lotmus, which is now FirstUSA. As banks were failing, they moved so that they could be able to charge higher fees."
No limit on rates in 26 states There are 26 states that have no limit on what bank credit card issuers can charge for interest rates, according to the American Bankers Association. Issuers in 27 states have no limit on what they can charge for annual fees.

California, Delaware, South Dakota and Tennessee are among the states offering the least protection. These four states currently have no maximums on the following:

delinquency fees cash advance fees over-the-limit fees transaction fees stop payment fees ATM fees mandatory grace period

Arkansas the most consumer-friendly Currently, Arkansas has the most consumer-friendly laws for capping credit card rates and fees.

Each state's legislative body sets the restrictions on what banks can charge, according to the ABA.

"It's been a real problem for state legislators because what happens is that they try to institute a law that applies to businesses in their states and those companies will move out of the state to sideswipe the law but still send credit cards to people who live in that state" said Detweiler.

The action pending in New York state seeks to limit interest rates at 15 percent on all cards whether the issuer is based in New York or not.

Court decision paved the way Credit card issuers scored a sweeping victory in 1978 when the Supreme Court ruled in Marquette vs. First Omaha Services that it was legal for nationally chartered banks to export more costly terms of their cards to states where the laws regarding interest rates restricted such practices.

The card issuer need only follow the law of the state in which its credit card operations are located.

At first, department store cards did not fall under the ruling. They varied interest rates according to the laws of the states where each cardholder lived. But in 1987, federal law changed. Now retailers can create special-purpose "credit-card" banks that can export credit card rates under the Marquette decision.

Retailers open special credit card banks "A number of large card-issuing chains have opened up these special banks and are sending their high-priced cards into states where ceilings are lower," Detweiler wrote in her book, "a trend that is likely to continue."

The primary federal usury laws are contained in the National Bank Act (NBA) and the Depository Institutions Deregulation and Monetary Control Act of 1980.

"Back in the 1980s, when rates would go as high as 23 percent, there was a move in Congress to impose a usury law," said Philip Farley, manager of regulations assistance at the Federal Reserve Bank of Philadelphia, which regulates banks in Pennsylvania, a portion of Delaware and New Jersey. "But the lobbyists said it was counterproductive because if rates were too low, lenders would not allow for mortgages or credit cards,"

Usury caps a waste of time? And some economists said usury caps were a waste of time because the Truth in Lending Act guaranteed that issuers would disclose rates, Farley said. They believed the required disclosures would direct consumers away from high charges.

As a result, there is no federal cap on rates. "The federal government only requires that whatever rates, fees or terms are set by issuers be disclosed to the consumer in accordance with the Truth in Lending Act," said Farley.

The cost of credit card debt is enormous. According to a Consumer Federation of America report released last December, credit card debt amounted to $452 billion. That total amounts to an average of $7,000 in debt for the estimated 55 million to 60 million households with credit cards.

With the exception of such states as Arkansas, New Hampshire, Ohio and New Mexico that are more cardholder-friendly, consumers have few choices.

Issuers won another round in a landmark 1992 case. Barbara Smiley, a Los Angeles credit card customer of Citibank's sued over a $15 late fee she was assessed. California law does not allow such charges, and she filed on behalf of all the state's Citibank credit customers who had been hit with late fees.

National banks levy charges nationwide The Supreme Court had ruled in 1978 that a national bank could impose any credit rate allowed by the state in which it is located. In Smiley's case, the court ruled the term "interest" encompasses late-payment fees.

The Comptroller of the Currency, the federal official in charge of regulating banks, previously had ruled that such late-payment fees are valid anywhere Citibank customers reside, and the court ruled in the issuer's favor.

The California Supreme Court previously had reached the same conclusion.

Consumer advocates say it wouldn't hurt to find out where a bank's credit card operation is located. Though location is not the sole reason issuers increase fees, it may give some inkling about how high rates can go.

Meanwhile, Lohn doesn't use the Citgo card because there's a Mobil station nearby, but he does keep the card as a reminder of the impending state bill.

"My question was why would New York charge 21 percent but other states only charge 6 percent? What's the justification? It's good to know that there's a bill that would keep the interest rates from going higher than 15 percent."