Home     About Us    Contact Us     Contribute     Privacy
Investing
Stocks
Bonds
Mutual Funds
Biz
Credit
Career
College
Economics
Tax
More
 
 
Marketplace
Related Articles
More
Related Categories
Tip of the Day

Tip of the Day Beware of Scams

Beware of Scams - You should always beware of scams, fraudulent practices, and these days, especially, there are plenty of them out there. Rule of thumb - if it...

read entire tip

Related Podcasts
Recently Added
Other Great Sites
 

Credit Card Providian

Providian was an American Credit card company doing gigantic business during the early eighties. Andrew Seth Kahr founded this company in 1984 under the name First Deposit Corp. It came to be known later as Providian. Providian later was acquired by Washington Mutual in 2005, and is currently owned by Chase.

Providian is an American company which has gained world wide notoriety due to its unethical financial practices. Providian earned millions of dollars by lending credit to the subprime market. Subprime is a term with many implications. It usually refers to a market consisting of consumers with a very unhealthy financial history or weak financial health. Consumers with history of higher default on loan repayments, those with limited debt experience, consumers with excessive debt, those with a history of missed payments, those who repeatedly fail to pay debts and consumers with legally declared bankruptcies, all together contribute in the making of this subprime market.

Kahr furthered his infamous business by exploiting the subprime consumers with timely credit when they needed it the most. The policy of Providian was to give credit to these high-risk, subprime consumers who were all refused credit by other companies, at the time of their extreme necessity, at a higher rate of interest. The rate of interest charged at that time by Providian was 29.9 %. His money making policy was quite clear-to exploit the needy customers to the maximum he could.

Andrew Kahr was in the habit of issuing regular memos to the top executives of the Providian credit card company. One of his infamous memos to the executive vice-president of his company, Mr. David Alvarez described in detail what Kahr thought about his way of doing business.

He did not seem in any way plagued by guilt for the unethical way he treated his customers. He was of the opinion that credit business was by nature risky, and hence very profitable, and no means used to further this business was unfair to the consumers. Kahr delighted and simultaneously profited by swindling consumers in different ways. One of Kahr's favourite strategies was to trap customers with penalty fees for late payments or going over credit limits. This not only helped him to generate revenue but also allowed him legal permission to raise the interest rates. Finally after a series of class action suits being filed, Providian was forced to pay $100 million in cash, credits and other benefits as settlement.

Discuss It!

Showbox for ios said:

Showbox is considered as Showbox App in the world of iPhones and iPads as it has same features as of Showbox

Most Popular Articles
Most Popular Definitions
 
Daily Definition

Definition of the Day Across The Board

Across The Board - Across the board is a stock market action, or movement, that affects most or all of the stocks on the board in the same way. Therefore, if an ?Across the Board? occurs, the majority, or all, the stocks on the stock market will either go up...

read entire definition

 
 

 

 

Home     About Us    Contact Us     Contribute     Sitemap

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Copyright © 2009 TeenAnalyst.com