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Regulators to Shut Down NextCard Accounts Today

July 10, 2002|From Associated Press

The fallout from the February failure of online credit card issuer NextCard Inc. will land on about 800,000 customers today when federal regulators close their accounts, abruptly cutting them off from some incentive programs that reward their past spending.

The Federal Deposit Insurance Corp., which has has been overseeing the business since regulators seized the accounts Feb. 7, waited until Tuesday to tell NextCard customers their Visa credit cards would become worthless today. Regulators closed NextCard's banking subsidiary because of heavy loan losses.

Many NextCard customers received the news of the account closures in e-mails sent Tuesday. Other customers won't find out until they receive letters later this week.

"We tried to give as much warning as possible," said FDIC spokesman David Barr. "It's been a real juggling act for us to keep these accounts active."

NextCard's account holders will not be able to cash in bonus points they stockpiled through the incentive programs once available to them. Online retailer Amazon.com, which owns an 8.1% stake in San Francisco-based NextCard, provided one of the credit card company's most popular incentive programs. The FDIC advised NextCard account holders that Amazon wouldn't redeem the spending points, but Amazon said it would honor them.

NextCard's stock, which peaked at $53.12 in late 1999, was delisted from Nasdaq in March.

NextCard said in May that it probably would file for Chapter 11 bankruptcy. Company officials did not return calls Tuesday.

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