Wells Fargo is terminating all existing personal lines of credit, a move that could impact consumer credit scores, CNBC reported Thursday.
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The bank’s revolving lines of credit, which typically allow consumers to borrow between $ 3,000 and $ 10,000, will be closed in the coming weeks, according to customer letters reviewed by CNBC.
In the letter, Wells Fargo said it “recently reviewed its product offerings and decided to stop offering new personal line of credit and wallet accounts and close all existing accounts,” The Hill reported. Instead, the bank will focus on credit cards and personal loans.
Revolving lines of credit have been marketed as a way for consumers to consolidate higher interest credit card debt, finance home renovations or avoid overdraft fees on linked current accounts, according to CNBC.
Customers have been told the accounts will be closed in 60 days, the network reported. Any remaining balance will require minimum payments at a fixed rate.
Wells Fargo has also informed customers that account closings “could impact your credit score,” according to CNBC.
A spokesperson for the bank said Wells Fargo made the move last year as part of an effort to simplify its product offerings, CNN reported.
The move comes after the Federal Reserve’s 2018 decision to ban Wells Fargo from increasing its balance sheet until it resolves compliance issues resulting from the bank’s fake accounts scandal, USA Today reported. The bank announced in 2020 that it would no longer extend home equity lines of credit, then said it would stop providing auto loans to most independent car dealers, the newspaper reported.
Wells Fargo paid $ 3 billion in February 2020 to settle fake account investigations by the Department of Justice and the Securities and Exchange Commission, the Wall Street Journal reported.
In the letter, Wells Fargo said the account closings could not be undone, CNBC reported.
“We apologize for the inconvenience caused by this line of credit closure,” the bank said. “The closure of the account is final.”
In a statement sent to CNBC, a spokesperson for Wells Fargo said, “We realize the change can be inconvenient, especially when customer credit can be affected.” The spokesperson added that the bank was “committed to helping every customer find a credit solution that meets their needs.”
Consumer advocates, including U.S. Senator Elizabeth Warren, D-Mass., Have been angered by the bank’s move.
âNot a single @WellsFargo customer should see their credit rating suffer just because their bank is restructuring after years of scams and incompetence,â said Warren. tweeted. âSending a warning just isn’t enough – Wells Fargo needs to fix it. “
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