Washington Mutual, the biggest American savings and loan, agreed yesterday to buy Providian Financial for $6.45 billion in stock and cash to enter the lucrative consumer credit-card business.

Providian shareholders will receive the equivalent of $18.71 a share, Seattle-based Washington Mutual said. That’s 4.2% more than Providian’s closing price on June 3. Eighty-nine percent will be funded with stock and the rest with cash.

Washington Mutual’s biggest acquisition in seven years may help it reverse a four-quarter decline in profit as rising money-market rates crimp lending margins and stifle demand for consumer mortgages. Credit-card interest helped to swell Providian’s return on equity to 15% last year from 10% in 2003, while Washington Mutual’s fell to 14% from 20%.

“The mortgage industry is slowing down,” said Richard Bove, an analyst at Punk Ziegel & Company in Pinellas Park, Fla. “Providian’s expertise in the credit-card markets also tends to be among low-income people, which fits well into the demographic that does business with Washington Mutual.”

Providian’s customers, many of whom are lower-income, may pose a greater risk of default if the economy slows. Providian’s last CEO, Shailesh Mehta, failed to anticipate how many of the company’s cardholders would be affected by the slowing economy in 2001, and he was replaced by Joseph Saunders when profits plunged as defaults soared. The company’s shares plummeted 94% in 2001.

“There are risks in the credit-card business, but they’re outweighed by the opportunities,” said Robert Stovall, a strategist at Wood Asset Management, which owns shares of Providian rival MBNA. Providian is the seventh biggest issuer of Visa and MasterCard credit cards with $18.5 billion in outstanding balances, according to the Nilson Report.

Washington Mutual CEO Kerry Killinger started implementing a plan to create his own credit-card business from scratch last year, while keeping his eyes open for acquisition candidates, he said on a conference call with investors today. In bringing on Providian’s experts in credit-card loan modeling and direct mail, “this puts us on the fast track,” he said.

Washington Mutual, the no. 3 American mortgage originator and servicer, in December hired Stephen Rotella, the top executive at JPMorgan Chase & Company’s mortgage business, as president to help cut costs and reverse its profit decline. Mr. Saunders, Providian’s chairman and chief executive, will continue to run the credit-card business and report to Mr. Rotella. Providian’s top management will also be retained.