Why did Wells Fargo stop lines of credit?
CNBC first reported the change on Thursday. “In an effort to simplify our product offerings, we've made the decision to no longer offer personal lines of credit,” the bank told CNBC in a statement, “As we feel we can better meet the borrowing needs of our customers through credit card and personal loan products.” ForbesHave A Personal Line Of Credit With Wells Fargo? Do This Next – Forbes Advisor
Is Wells Fargo shutting down my credit card?
Here's what happens next. Why the bank says it plans to "simplify" offerings, and what that means for customers. Wells Fargo is shutting down all existing personal lines of credit in the coming weeks and will no longer offer the product to customers. CNETWells Fargo is closing your personal line of credit account. Here's what happens next
Is a credit card a personal line of credit?
A personal line of credit is similar to a credit card. Users are given a credit limit, based on their credit history and income, and they can borrow up to that limit on an ongoing basis. They are often used to consolidate high-interest debt at a lower rate or pay for expensive projects like house renovations. CNBCWells Fargo is shuttering all personal lines of credit. Here's what customers need to know
Read full article at Charlotte Observer
11 July, 2021 - 02:23pm
Wells Fargo will no longer offer personal lines of credit to customers and will shut down existing ones in the coming weeks, according to CNBC.
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Wells Fargo will no longer offer personal lines of credit to customers and will shut down existing ones in the coming weeks, according to a CNBC report.
Revolving lines of credit had been a popular consumer lending product, which typically gave users $3,000 to $100,000 in revolving credit lines and was pitched as a way for customers to consolidate higher-interest credit card debt or avoid overdraft fees on checking accounts.
“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 said in a six-page letter to customers obtained by CNBC.
The move would instead allow the bank to focus on credit cards and personal loans, the letter said.
Customers have been given a 60-day notice before their accounts are shut down, with remaining balances requiring regular minimum payments at a fixed rate, according to CNBC.
Wells Fargo also warned customers that the account closures “may have an impact on your credit score,” CNBC reported.
The move comes after the Federal Reserve barred the bank from growing its balance sheet until it fixed compliance issues that stem from the bank’s fake accounts scandal. Last year, the bank announced it would no longer offer home equity lines of credit and later said it would stop making auto loans to most independent car dealerships.
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11 July, 2021 - 02:23pm
11 July, 2021 - 02:23pm
A spokesperson for the bank said Wells Fargo made the decision last year as part of an effort to simplify its product offerings. The bank feels it can better meet borrowing needs through credit cards and personal loans, the spokesperson said.
The popular consumer lending product that the bank is shuttering typically lets users borrow up to $100,000, according to CNBC, which reported the news earlier Thursday. The product was advertised to consumers as a way to consolidate higher-interest credit card debt or pay for home renovations.
In notices to customers about the closure, the bank warned that the change could impact their credit scores.
Wells Fargo was trending on Twitter Thursday night following CNBC's report, with consumer advocates, including Senator Elizabeth Warren, expressing outrage.
"Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence. Sending out a warning notice simply isn't good enough -- Wells Fargo needs to make this right."
The news comes more than four years after a scandal erupted in which the bank admitted to opening millions of fake accounts, as well as forcing customers to pay for unneeded auto insurance or charging unnecessary mortgage fees. The Federal Reserve called it "widespread customer abuse," and in 2018 the central bank imposed a cap on Wells Fargo's assets — essentially barring the it from increasing its balance sheet until it addresses the compliance failures that led to the scandal.
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11 July, 2021 - 02:23pm
11 July, 2021 - 02:23pm
11 July, 2021 - 02:23pm
The bank has sent letters to customers notifying them that all existing personal lines of credit will soon cease to exist, according to the six-page letters CNBC reviewed.
“Wells Fargo recently reviewed its product offerings and decided to discontinue offering Personal and Portfolio line of credit accounts and close all existing accounts,” read the letter, according to the outlet.
The credit lines, which let people borrow between $3,000 and $100,000, were meant to help avoid overdraft fees and consolidate higher-interest credit card debt, according to the outlet.
The bank said in the letter that scrapping the credit lines would enable it to instead prioritize credit cards and personal loans.
But the closures, according to Wells Fargo’s letter, could cause issues for customers.
In an FAQ section of the notice, the company said the closures were “final” and “may have an impact on your credit score,” according to CNBC.
Sen. Elizabeth Warren took to Twitter Thursday afternoon to condemn the way the move is being handled.
“Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” tweeted Warren. “Sending out a warning notice simply isn’t good enough – Wells Fargo needs to make this right.”
“We realize change can be inconvenient, especially when customer credit may be impacted,” a Wells Fargo spokesman told CNBC after it published news of the move, noting the bank is “committed to helping each customer find a credit solution that fits their needs.”
Customers were given a 60-day notice about the forthcoming closures and were told their remaining balances mandate regular minimum payments at a fixed rate — contrary to the product’s initial variable interest rates, the company told CNBC in a statement.
Amid the coronavirus pandemic, Wells Fargo has had to make some changes, including backing away from certain products — due also to limitations from the Federal Reserve — and offloading assets and deposits, according to CNBC.
11 July, 2021 - 02:23pm
PepsiCo and Delta are also on our radar.
The finance giants are kicking off earnings this quarter. On Tuesday, we expect JPMorgan Chase (JPM) to report, along with PepsiCo (PEP). Reports from Wells Fargo (WFC), Bank of America (BAC), Schwab (SCHW), BlackRock (BLK), and Delta (DAL) are expected to follow on Wednesday, with a report from Morgan Stanley (MS) rounding out the week on Thursday.
All banks performed well, as our analysts expected, on the latest round of the U.S. Federal Reserve's stress tests. Wells Fargo stood out among the 23 banks that participated, carrying over 10% in excess capital. Following JPMorgan and Bank of America, Wells Fargo brings in the third most deposits in the United States.
Carole Hodorowicz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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10 July, 2021 - 04:46am
CHARLOTTE, N.C. (FOX 46 CHARLOTTE) – Wells Fargo is ending personal lines of credit from $3,000-$10,000.
The company said it made the decision a year ago and believes it can better meet the needs of borrowing customers through credit cards and personal loans.
“Personal lines of credit can be used for a lot of different things. It can be used for home improvement. It can be used for backing up your checking account in case you overdraft or whatever, so there is a lot of people that have it,” financial adviser with Carroll Financial Brett Boner said.
In a statement, Wells Fargo said, “We realize change can be inconvenient, especially when customer credit may be impacted.”
“If you think about it, a credit card is going to have a much higher interest rate. It might have an initial 0% 12-month plan going, but long-term a credit card is going to have a higher interest rate than a personal line of credit,” Boner said.
He said impact to credit scores should not be drastic. He estimates a 3–5 point deduction.
“People don’t want that right? If you are trying to open up a home loan or get a new mortgage, they check everything so closely these days, that anything they see like that, that is an activity like that is going to throw up a red flag for the under-writers,” Boner said.
Wells Fargo said the move does not impact commercial accounts.
It will be giving customers a 60-day notice with a series of reminders before the closer and will help customers find a credit solution.
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