With shakiness on Wall Street and stock prices and reputations on the line, more credit card companies are settling class actions rather than going through time-consuming and costly litigation, according to lawyers and experts who follow the industry. The two latest instances came to light last week: Providian Financial Corp. of San Francisco said Friday that it would pay $105 million to settle accusations against its marketing and sales practices, and Bank One Corp. proposed to pay nearly $40 million to settle complaints from customers of its First USA unit.

In both situations — as in cases that unfolded last year — the companies said they did not think they had done anything wrong but were eager to get pesky litigation out of the way.

Industry observers said that the companies acted wisely, and that it made for better customer relations to offer money to unhappy cardholders than to press points in court about late fee policies and other matters.

Wall Street seemed to smile on the strategy. Providian’s stock rose $4.5, to close at $57.5. Bank One’s stock fell $1.065, to $36.625.

Nancy R. Wilsker, an lawyer specializing in bank regulatory law at the Boston law firm of Brown, Rudnick, Freed & Gesmer, said the banking companies seemed to be trying for a “pragmatic solution” with the settlements.

“When a bank makes an offer like this, my experience is they are trying to do the right thing both for their own business and, as they see it, for their customers,” she said.

In the past, when companies believed they had not done anything wrong, they would fight such lawsuits, Ms. Wilsker said. “Today, they look at the cost of the litigation, the duration of the litigation, and the effect it will have on the market’s view of the bank, and the likelihood there will be an award against them even if they are right. When they look at all those things, there’s more impetus to settle now than ever before.”

Since the companies’ legal fees and possible payments to the plaintiff’s attorneys could wind up costing hundreds of millions of dollars, even if the companies believe they are right, “it isn’t worth the principle,” Ms. Wilsker said. “They say, ‘Let’s settle it and move on.’ “

Leonard A. Bernstein, partner and the chairman of the consumer financial services group for Newark, N.J., law firm of Reed Smith LLP, said the lawsuits send a message to banking companies that customer service “must be very responsive and flexible to avoid the huge difficulties” like a lawsuit. “The class-action hammer can be very damaging.”

Banking companies are now instructing customer service representatives to cancel late fees on many occasions when cardholders call up and complain, Mr. Bernstein said. This step is not “only for customer retention, but that’s where class actions are bred for disgruntled customers,” he said.

Several class actions were filed last year against card companies. The suit against Providian was by far the most costly.

In August, Citibank agreed to pay $45 million to settle a suit claiming that credit card customers had been forced to pay extra interest and late fees even when monthly payments had arrived on time. Citi did not admit any blame, but said it settled to “avoid the expense of litigation.”

The next month Chase Manhattan Corp. agreed to pay $22.2 million over virtually the same matter.

Bank One’s settlement proposal — which was brought to public attention by the Wall Street Journal last Thursday — states that First USA “denies any wrongdoing and will vigorously defend itself if the settlement is not approved.” The U.S. District Court for the Southern District of Illinois will conduct a hearing Jan. 24 on the proposal.

Ed Mierzwinski, executive director of the U.S. Public Research Group, called Bank One’s proposal “paltry” compared with Providian’s settlement. “I hope this is only the tip of the iceberg, because from what I’ve seen, their practices have been among the most unconscionable and anti-consumer of any company in the business,” he said.

The class action alleged that First USA assessed late fees to customers who had paid on time.

The $105 million settlement was Providian’s second hit of the year. In June, the company agreed to pay $300 million to consumers to settle a class action and an administrative enforcement action from the Office of the Comptroller of the Currency. The lawsuit had contended that Providian routinely added fee-based products that customers had not requested, such as credit protection, to its credit cards, and charged consumers for them.

After that settlement, Providian launched a public relations campaign aimed at cleaning up its image and improving customer satisfaction.

The remaining consumer suits against Providian were consolidated into two class actions, which would be resolved through the second settlement proposal. That sum is still subject to court approval.

The class action period for Providian suit dates from March 1995, to Dec. 14, 2000. Jonathan K. Levine, a lawyer with the New York firm of Kaplan Kilsheimer & Fox LLP who represents the Providian plaintiffs, said he could not say how many customers were involved — perhaps millions — and the amounts they receive from the settlement would depend on how much they had lost.

“These suits are sending a message to the companies that these deceptive business practices will not be tolerated,” he said.

Alan Elias, a spokesman for Providian, took issue with the dates Mr. Levine named, and said that Providian had changed its policies long before Dec. 14.

“If they’re talking about something that occurred” two weeks ago, “they’re dead wrong,” he said. “The business practices that have been the subject of these lawsuits are literally and figuratively about the past. They have nothing to do with the Providian of today or the Providian of the future.”

Providian reviewed all its solicitation materials and marketing practices over the past 18 months “to ensure that we are being as clear and forthright with all of our materials and disclosures,” Mr. Elias said. For example, the so-called Schumer box, which states the monthly interest rate, is now printed in 18-point type, and the fine print “is not fine anymore,” he said. “It’s big.”

Joel J. Houck, senior analyst at A.G. Edwards & Sons Inc., said the $405 million Providian would pay in the two settlements “looks like a lot of money, but over the three-to-five year period is nothing.” Since the company’s stock rebound on the day the second settlement was announced indicates that the amount “wasn’t as bad as people were thinking,” he said.

The Bank One case is farther from being settled than Providian’s, but analysts said the vigorous efforts by Jamie Dimon, Bank One’s new chief executive officer, to execute a turnaround would likely mean that the company will try hard to tie things up and move on.

“In context of Bank One’s financial challenges in 2000, this isn’t really all that material,” said David C. Stumpf, a bank analyst for A.G. Edwards. The market is willing “to look at the positive side, the silver lining of what the company is doing,” he said. “Jamie Dimon and the management team are viewed positively on the Street, even if they’re having a negative financial impact in the short run.”

Mr. Houck said that 2000 was the year that consumer backlash came to a head. “I don’t know if there will be another round of scrutiny” this year, he said. “The regulators have looked at these issues.”

David Bartone, a Washington banking attorney, said, “I think all of the companies are aware of the fact that consumers are more educated and aware of manipulative practices. But it’s not to say it’s going to be permanent. Things like this will happen again.”

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