Advanta Corp., credit card lender to nearly 1 million small businesses, announced earlier this month that it will be closing all cardholders’ accounts. The card closures were originally supposed to occur on June 10, but Advanta late last week decided to move this date up to May 30—this Saturday!

This move is unprecedented and a sign of the financial times. The company has already eliminated 300 jobs, cut its dividend 88 percent and raised customers’ interest rates substantially. With a $75 million first-quarter loss, however, Advanta is sinking fast.

For many cardholding small business owners the account closures mean scrambling to get new cards and switching automatic payments tied to the Advanta cards. Alerting cardholders of these closures has not exactly been a high priority to Advanta though, at least not in the eyes of customers. Not only are cardholders being given mere days to make other arrangements, but they are also being notified through one channel, one time. While Advanta’s recent interest rate hikes and the account closures have caused small business owners many headaches, it’s the horrendous notification process that’s plain old bad business. According to a BusinessPundit article, one Advanta customer suggested that a notification be posted on the Web site, but was told “no” because the action is not required by law. As early as late last week, many customers still had no clue of the card closure. Who knows, there may still be customers who don’t know.

I think all small business owners can learn an important lesson in “what not to do” from Advanta. When financial troubles or any kind of troubles come your way, you’ll be surprised by how understanding your customers can be, as long as you’re up front with them. What they are not  so understanding about, however, is being kept in the dark and then slammed with the shocking news at the last minute. If you run into tough times, the manner in which you handle your customers can make all the difference.

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