Wells Fargo is discontinuing all active personal lines of credit. They will no longer offer the product.
The bank mailed out letters to all it’s customers that they will no longer offer personal lines of credit.
What Is A Personal Line of Credit
A personal line of credit is a revolving credit line which lets its users borrow between $3,000 to $100,000 to consolidate higher interest credit card debt, pay for home renovations or prevent overdraft fees on linked bank accounts. The line of credit is available for customers to use, therefore borrowers do not get charged interest until they access funds.
Effects on Customers
The bank warned customers that closures might have a negative effect on their credit score. Closing an account can make your credit score drop depending on your credit utilization.
Customers were given a 60-day notice, after that time accounts will be closed and a fixed rate payment plan instituted.
Upon review of product offers, Wells Fargo decided to discontinue the product in favor of credit cards and personal loans.
Wells Fargo 2018 Fake Account Scandal
Wells Fargo CEO Charles Scharf has been forced to step back from some products that were offered because of limitations that have been set by the Federal Reserve. These limitations are a result of the 2018 fake accounts scandal in which unauthorized accounts were opened in customer names. Many believe that this is a result of the pandemic and economic fears.
The decision to close accounts has angered many of their customers. It may be best to pay back balances as quickly as possible.
Wells Fargo apologized for the inconvenience due to the line of credit closure but the closures are final.
Most banks encourage lending and making loans. Only time will tell if this is the beginning of some more.