SecProbe.io

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CERTAIN INFORMATION IN THIS LETTER HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED INFORMATION. OMITTED INFORMATION HAS BEEN
REPLACED BY [*].

                                                               September 8, 2005

Securities and Exchange Commission
Division of Corporate Finance
100 F Street, NE
Washington, D.C. 20549
Attn: Don Walker

Re: Advanta Corp.
    Form 10-K for the Fiscal Year Ended December 31, 2004
    Forms 10-Q for the Quarters Ended March 31, 2005 and June 30, 2005
    File No. 000-14120

Dear Mr. Walker:

We have received your letter of comments dated August 25, 2005 relating to
Advanta Corp.'s Form 10-K for the year ended December 31, 2004 (the "2004 Form
10-K") and Forms 10-Q for the quarters ended March 31, 2005 and June 30, 2005.
Set forth below are our responses to your requests for supplemental information,
numbered to correspond with the numbering of your comments to which they relate
on your letter. In order to facilitate your review, we have recited the comments
in italics and followed each comment with our response. Defined terms used in
this response and not otherwise defined herein have the meanings ascribed to
them in the 2004 Form 10-K.

For reasons of business confidentiality, this submission is accompanied by a
request under Securities and Exchange Commission (the "Commission") Rule 83 (17
C.F.R. 200.83) for confidential treatment of the information included as
Attachment 3 to this letter (the "Confidential Material"). We have voluntarily
supplied the Commission staff with copies of the Confidential Material
comprising Attachment 3 and therefore request that such material be maintained
in confidence and not made part of the public record. We have filed a separate
letter with the Office of Freedom of Information and Privacy Operations in
connection with that request. We have redacted the Confidential Material from
the version of this letter filed via the Commission's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system and have included the Confidential
Material solely in paper copies of this letter submitted to the Commission
staff. The

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Confidential Material submitted in paper form has been marked "Confidential
Pursuant to 17 CFR 200.83" and further identified as "Rule 83 Confidential
Treatment Requested by Advanta Corp.: Request No. 1."

Form 10-K for the Fiscal Year Ended December 31, 2004

Advanta Business Cards, page 29

1.   Comment: In future filings, starting with your next 10-Q, please revise to
     explain fully the reasons for the changes in your provision for loan losses
     by discussing specific events that cause management to adjust the provision
     and conclude on the adequacy for the provision and allowance for loan
     losses.

     Response:

     The discussion of the variance in provision for credit losses on page 29 of
     the 2004 Form 10-K is an overview of the more detailed information provided
     in the Provision and Allowance for Receivable Losses section of
     Management's Discussion and Analysis beginning on page 33 of the 2004 Form
     10-K. In future filings, we will include supplemental summarized comments
     in this overview and a cross-reference to where more detail is provided,
     such as the following:

     The decrease in provision for credit losses for the year ended December 31,
     2004 as compared to 2003 reflects a reduction in the estimate of losses
     inherent in the portfolio based on the improving trends in delinquency and
     principal charge-off rates reflecting the current composition of the
     portfolio that included more high credit quality customers as compared to
     2003, partially offset by the increase in average owned business credit
     card receivables. See the Provision and Allowance for Receivable Losses
     section of Management's Discussion and Analysis of Financial Condition and
     Results of Operations for more detailed discussion and a table of credit
     quality data.

Managed Receivable Data, page 36

2.   Comment: Presentation of non-GAAP statements of income even when reconciled
     to reported results is potentially confusing to investors. Please confirm
     you will remove pro forma statements of income in all future filings,
     including the reconciliation of actual owned (GAAP) income statement
     measures and statistics to income statement measures and statistics on a
     managed basis on page 36. Instead, consider expanding your disclosures to
     discuss and quantify the impact of securitizations on your reported
     results, including the impact on specific income statement captions and on
     net interest margins.

     Response:

     We note your comment to remove the managed income statement measures and
     statistics and respectfully request that you reconsider this comment for
     the following reasons. We have included selected managed income statement
     measures in our disclosures because we believe that these measures enhance
     the transparency of the performance of our business. Management uses these
     measures as part of its operation and review of the business. We view these
     disclosures as helpful to financial statement users for the reasons set
     forth in our 2004 Form 10-K. We also believe that these disclosures are
     consistent with disclosures of other registrants in the credit card
     business and therefore, the inclusion of this information assists financial
     statement users by increasing comparability of our managed income statement
     measures and statistics to those of

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     other registrants. It is our position that these disclosures have been made
     in a manner that fully complies with Item 10 (e) of Regulation S-K. For all
     of these reasons, we think it is useful and appropriate to continue to
     include these disclosures, but we also plan to enhance the disclosures in
     future filings with additional information that helps financial statement
     users understand the impact of securitizations on our reported results,
     including the impact on specific income statement captions. Once you have
     had an opportunity to review our response and consider our position, we
     would be happy to discuss this comment further with you.

3.   Comment: Please tell us the how management uses 'Risk-adjusted revenues' to
     evaluate the Advanta Business Cards segment. We noted that this is the only
     section in the filing that includes this measure. Amended Item 10(1) of
     Regulation S-K, requires disclosure of the reasons why management feels a
     non-GAAP term is useful to investors.

     Response:

     Risk-adjusted revenues represent the total of interest income, noninterest
     revenues, interest expense and provision for credit losses. Each of the
     components of risk-adjusted revenues is a financial measure calculated in
     accordance with GAAP. Accordingly, we do not believe that our presentation
     of risk-adjusted revenues constitutes a non-GAAP financial measure pursuant
     to Item 10 (e) of Regulation S-K. Management uses risk-adjusted revenues as
     a basis for monitoring the risk-based return on the portfolio and
     components of our portfolio. Generally, based on risk-based pricing
     strategies, customers with higher credit losses should have higher
     revenues. We believe the measure is useful to investors as a measure of the
     Company's ability to appropriately price for the risk of the portfolio. We
     believe disclosing risk-adjusted revenues along with our disclosures of
     revenues and credit losses assists investors by demonstrating the
     relationship between revenues and credit losses in one concise measure.
     While we do not believe the measure constitutes a non-GAAP financial
     measure for purposes of Item 10 (e) of Regulation S-K, we will include
     disclosure of why we believe the measure is useful to investors in all
     future filings that include risk-adjusted revenue measures.

Market Risk Sensitivity, page 46

4.   Comment: We note that your business credit card receivables include
     interest rate floors, as described on page 46 of Form 10-K. Please tell us
     the extent to which you use derivative instruments to hedge interest rate
     risk and other risks.

     Response:

     In the year ended December 31, 2004 and through the date of this letter, we
     have not used derivative instruments to hedge interest rate risks or other
     risks.

     The interest rate floors embedded in our business credit card receivables
     are not embedded derivatives accounted for separately pursuant to paragraph
     12 of SFAS 133 (as amended) because the economic characteristics and risks
     of the interest rate floors are clearly and closely related to the economic
     characteristics and risks of the receivable (the host contract).

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Liquidity, Capital Resources and Analysis of Financial Condition, page 47

5.   Comment: The consolidated statement of cash flows indicates cash used in
     operating activities totaled $92.3 million for the year ended December 31,
     2004. In future filings, please revise your liquidity, capital resources
     and analysis of financial condition to discuss the reason for this cash use
     from operating activities and describe how you plan to fund growth and
     continued operations.

     Response:

     We will comply with this comment in all future filings.

Note 2 - Summary of Significant Accounting Policies, page 55

Allowance for Receivable Losses, page 56

6.   Comment: You disclose that your charge-off and re-age policies for business
     credit card accounts conform to the Uniform Retail Credit Classification
     and Account Management Policy, as well as the Credit Card Lending Guidance,
     issued by the Federal Financial Institutions Examination Council ("FFIEC").
     Please tell us your re-age policies and how such policies are incorporated
     in your calculation of the allowance for loan losses.

     Response:

     An excerpt from our Credit Policy Manual describing our re-age policy is
     attached in Attachment 1. In estimating our allowance for receivable
     losses, we generally evaluate receivables collectively for impairment
     through the use of a migration analysis as well as consideration of other
     factors that may indicate increased risk of loss, including accounts that
     have been re-aged within the last 24 months. Reserves are established for
     re-aged accounts based on our estimate of the incremental risk to the
     portfolio represented by accounts that have been re-aged. For purposes of
     the calculation, we disaggregate re-aged accounts into two categories: (1)
     re-aged accounts that are in a workout program; and (2) all other re-aged
     accounts ("manual re-ages"). The reserve need for re-aged accounts that are
     in a workout program are calculated based on the aggregate portfolio
     migration analysis plus an additional percentage that represents an
     estimate of the incremental risk of accounts in workout programs. We
     calculate the reserve need for manual re-ages based on historical loss
     rates for manually re-aged accounts, the receivable balances outstanding
     and level of delinquency of the manually re-aged accounts at the reporting
     date.

Securitization Income, page 57

7.   Comment: You state that during the revolving period of each business credit
     card securitization, you record securitization income representing
     estimated gains on the sale of new receivables to the securitization trust
     on a continuous basis. Please tell us how the transfers of receivables to
     the securitization trust during the revolving period qualify for sales
     accounting according to paragraph 9 of SFAS 140.

     Response:

     In accordance with paragraphs 78 and 79 of SFAS 140, gain or loss
     recognition for revolving-period receivables sold to a securitization trust
     is limited to receivables that

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     exist and have been sold. Adding receivables to a trust, in itself, is
     neither a sale nor a secured borrowing under paragraph 9 of SFAS 140,
     because that transfer only increases our beneficial interest in the trust's
     assets. Recognition of a sale or a secured borrowing occurs when we receive
     consideration other than beneficial interests in the transferred assets.
     Transfers that result in an exchange of receivables for cash, that is,
     either transfers that in essence replace previously sold receivables that
     have been collected or sales of beneficial interests to outside investors,
     are transfers in exchange for consideration other than beneficial interests
     in the transferred assets and thus are accounted for as sales (if they
     satisfy all the criteria in paragraph 9 of SFAS 140) or as secured
     borrowings.

     During the revolving period of our business credit card securitizations,
     investors use cash collected from previously sold receivables to purchase
     interests in receivables from the trust to replenish receivables that have
     been repaid. These replenishment transactions are accounted for as sales
     under paragraph 9 of SFAS 140 as we have surrendered control over the
     receivables and received cash in exchange. We have concluded that control
     has been surrendered because the receivables have been isolated from us via
     the Advanta Business Card Master Trust, a qualifying special purpose entity
     under SFAS 140 (paragraph 9a); the investors have the right to pledge or
     exchange their beneficial interests in the Advanta Business Card Master
     Trust, and no condition both constrains the investors from taking advantage
     of their right to pledge or exchange and provides more than a trivial
     benefit to us (paragraph 9b); and we do not maintain effective control over
     the receivables through either (1) an agreement that both entitles and
     obligates us to repurchase or redeem them before their maturity or (2) the
     ability to unilaterally cause the holder to return specific assets, other
     than through a cleanup call (paragraph 9c).

     On a regular basis, we add receivables to the Advanta Business Card Master
     Trust in exchange for a beneficial interest in the assets of the Advanta
     Business Card Master Trust. In accordance with paragraph 9 of SFAS 140,
     these transfers are not accounted for as sales.

8.   Comment: Please tell us the amount of outstanding commitments to transfer
     assets to the securitization trust during the revolving period as of
     December 31, 2004.

     Response:

     See our response to comment #7 for a description of the revolving period of
     a business credit card securitization. There were no outstanding
     commitments to transfer assets to the Advanta Business Card Master Trust as
     of December 31, 2004 with the exception of $4.5 million of amounts due to
     the trust representing two days of finance charge collections on the
     trust's accounts. The $4.5 million liability was included in other
     liabilities and disclosed in footnote 7 in our 2004 Form 10-K. Under the
     terms of our business credit card securitizations, receivables arising in
     designated business credit card accounts are transferred to the Advanta
     Business Card Master Trust. Also, Advanta has a contractual commitment to
     transfer receivables subsequently created, if any, under these accounts. As
     of December 31, 2004, all receiv