A few weeks back, I had done an article on Advanta's high yield investment notes yielding 8.5%-11%. While double digit yields sound appealing, I had warned of their potential insolvency and since these investment notes are not FDIC insured, it turns into a very high risk proposition. If Advanta goes down, there's a high likelihood that retail investors holding these notes would lose their entire principal or a vast majority of them, depending on how bankruptcy proceedings play out.

Well, more recently I posted this article showing how Advanta took the unprecedented move of cutting off credit to their existing small business customers. I've never heard of a credit card company taking such drastic action to preserve capital.

Why am I revisiting this? Because today, I saw an article highlighting that they have now moved up the effective date of the freeze, which portends serious problems. This, coupled with the fact that I'm still seeing plenty of search traffic coming in on Advanta's high yield notes and the fact that they're still advertising these notes heavily makes for potential problems for prospective investors. Shares are under $1, not exactly a resounding endorsement for a recovery. Buyer beware!

What do I like for yield?

I still like Muni Bonds, here's a small stock that's raised dividends 24 times in a row!, and there are still some non-Financials on the high yield mega cap list that are worth checking out.


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