Wells Fargo Surprisingly Shuts Down Personal Credit Lines
Banking giant Wells Fargo announced it is ending its personal lines of credit in the next few weeks. The bank is shutting down its popular practice of providing personal lines of credit that range between $3,000 to $100,000. The bank sent out letters to its individual customers in the past few days.
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Wells Fargo Closing Personal Lines Of Credit
Many Wells Fargo customers use personal lines of credit to help consolidate higher-interest credit card debt. They also use the credit to pay for home renovations or to cover payments and avoid overdraft fees on checking accounts.
According to the letter sent by the bank to its customers, Wells Fargo will now focus on credit cards and personal loans. “Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts,” the bank wrote.
Offloading Assets And Deposits
Wells Fargo CEO Charles Scharf is trying to keep the bank afloat throughout the pandemic by making a series of tough decisions. This includes offloading assets and deposits and moving away from products that the Federal Reserve wants limited. Earlier in 2018, the agency banned Wells Fargo from growing its balance sheet. It can’t do so until the bank fixes its compliance requirements. A previous fake accounts scandal caused this problem earlier.
Those capitalization limits contributed to Wells Fargo losing out on growth opportunities before and during the pandemic. Rivals such as JPMorgan Chase and Bank of America made billions during the period that Wells Fargo’s hands were tied.
Customers Upset With Loss Of Credit
Customers are also upset with the loss of convenient products such as lost lines of credit. Last year, the bank stopped processing all new home equity lines of credit. Later in the same year, Wells Fargo also withdrew from a sizable stake in the auto lending business.
Now, Wells Fargo is simply removing all its traces from its credit program. The Bank also warned customers that account closures “may have an impact on your credit score” so they should act accordingly.
In another part of their letter, Wells Fargo clarified that there won’t be any reviews or reversals once they close an account. “We apologize for the inconvenience this Line of Credit closure will cause,” the bank said. “The account closure is final.”
Did The Federal Cap Cause Removal Of Credit Line?
In removing the credit line for consumers, Wells Fargo didn’t exactly attribute it as something required to stay below the Federal asset cap. Instead, the bank issued a statement explaining their decision. “In an effort to simplify our product offerings, we’ve made the decision to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products,” the statement read.
A company spokesman also added this remark. “We realize change can be inconvenient, especially when customer credit may be impacted,” However, the bank remains committed to “helping each customer find a credit solution that fits their needs,” the spokesperson said.
With the credit closure, Wells Fargo gives customers a 60-day notice to settle payments. After 60 days, the accounts will automatically close, and any remaining balances will require payments with a fixed interest rate.
In comparison, the credit line offered variable interest rates between 9.5% to 21%. This is why many people remain puzzled by Wells Fargo’s decision. Given the present climate, banks should be offering and accepting loans.
Lately, loan growth is getting harder to come by. A frenzy of loans during the earlier days of the pandemic helped boost banks. However, the federal government’s stimulus money encouraged many companies to pay off debts.
Meanwhile, households had little to spend outside of necessities by staying at home. In fact, big banks experienced the first aggregate drop in loans in more than a decade last year.
Watch the Yahoo Finance video reporting that Wells Fargo will end all existing personal lines of credit:
Do you agree with the timing of Wells Fargo’s decision to stop offering credit lines to customers? Did you find lines of credit useful to you during the pandemic?
Share your experiences and your thoughts about credit lines. Drop your comments below.
I think that Wells Fargo is being prudent as they are under an asset cap and need to have internal controls in place. This is part of those controls. I am not sure what Senator Warren is talking about… Dies she have a different agenda? Wells Fargo is making the right moves to have a well running top-notch financial institution again.
Customers of Wells Fargo should leave in droves. This bank has created it’s own problems and now is punishing it’s customers for it’s bad management. There are plenty of other banking institutions to use that are much more customer friendly. I have not an will not ever use Wells Fargo.
Not sure what the problem is. All they are doing is changing the type of loan you have. They do away with the line of credit and issue you a credit card. Credit card accounts are easier for the bank to manage they send you a statement every month and expect a minimum payment
Wells Fargo has a track record of porking its customers,, l wouldn’t use them if they were the last bank on the planet,, hopefully the Fed looks at HSBC next
As someone who banked with WF for 9 years and then started noticing that larger checks I was depositing into my business account were being held by the bank far longer than making sure they cleared the bank they were issued from. I had even called my customers to have them check to see if the checks had been cleared from their banks and in one instant the money had been held for 16 days after it cleared and Wells Fargo still would not show it in my account. My wife and I had a meeting with our WF banker and after he could not justify or explain why my own money was being withheld from me we climbed the corporate ladder until someone finally told us they were withholding our money for our own safe keeping??? We immediately pulled everything we had from Wells Fargo and we will NEVER use that bank again!! They are just like BOA. If you are not a multi-millionaire they treat you like garbage.
Wells Fargo always find ways to inconvenience customers. They say other offerings such as credit cards and personal loans will be available. These will no doubt have higher interest rates. Wells Fargo once again has lost their customers trust in them. Warning them of closing accounts will hurt credit scores. Once again, this is bad business practice. Trying to intimidate us. I would love to close all of my accounts and take my business elsewhere. One day you can bet I will do just that.
This is a bad time because money is tight for most of us right now. Couldn’t you wait until the pandemic is over or until they send us some more stimulus money. I just opened this account a few months ago. Nobody mentioned that your company would be closing down soon. This is a sorry business tactic.
The West Side Wells Fargo branch in Great Falls, MT has gone straight downhill during the last four or five years. First, everytime I’d go through the drive-thru, there’d be a new teller there. They seem to last about three months,then you never see them again. That in itself tells me something about how they must treat their employees. Another gal who had been in the main bank for more than several years, and was always helpful as heck, applied for the branch manager’s position when it came open. What did they do? They sent some clown from the other side of town over to be the new manager. Then they started making me give them a photo ID when I’d go through drive-thru to deposit $200 CASH into MY checking account. So much for the “this note is legal tender for all debts, public and private.” Cancelling my line of credit was the last straw. After writing 43,000+ checks during the last 47 years, I’m moving over to a local credit union, where the employees stay longer than three months!
I used to be with WF many moons ago for more than ten years. They never acted like I even existed. I was only an account number with small transactions so I didn’t matter to them. In the early 1980’s I left WF and tried another large national bank. They were just as bad. In the late 1980’s I found a local state chartered bank. They have been fantastic in service and friendliness. They know who I am regardless of the size of my account. I’ve been treated with respect from the beginning with a small account to today where my account is well above average size. They provide all the services I need.
I will never go back to any federally chartered bank!!