Wells Fargo Cancelling Personal Lines of Credit
What does this mean for the market? Is this the tipping point for the crash to come?
Wells Fargo has begun informing customers that it will no longer be offering personal credit lines, with all existing lines being shut down in the coming weeks.
In a six-page letter to customers obtained by CNBC, Wells Fargo said it had “recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts,” instead setting its focus on credit cards and personal loans.
The revolving credit lines had been a popular consumer lending product, allowing customers to consolidate higher-interest credit card debt, avoid overdraft fees on checking accounts, as well as other actions.
The credit lines usually allowed customers to borrow anywhere from $3,000 to $100,000, according to CNBC.
In a FAQ portion of the letter, the bank explained that the account closures “may have an impact on your credit score,” adding that they could not be reviewed or reversed.
“We apologize for the inconvenience this Line of Credit closure will cause,” the bank said, according to CNBC. “The account closure is final.”
In a statement sent to CNBC after its initial report was published, a Wells Fargo spokesman said, “We realize change can be inconvenient, especially when customer credit may be impacted,” adding that the bank was “committed to helping each customer find a credit solution that fits their needs.”
According to the news outlet, Wells Fargo said customers will be given a notice 60 days before their account is shut down, with remaining balances requiring minimum payments at a fixed rate.
The Hill has reached out to Wells Fargo for additional information.
The move comes as Wells Fargo has frequently sought to offset losses faced since it was revealed in 2016 that the bank charged fees on millions of accounts that were opened without customers’ consent or sold through misleading means.
In 2018, the Federal Reserve imposed an asset cap on the bank to limit its ability to grow its balance sheet until it addressed the improper accounts and practices.
That same year, Wells Fargo agreed to pay $1 billion in a settlement over charges that the bank had levied inappropriate fees on mortgage borrowers and forced loan customers to purchase auto insurance.