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. The bank previously offered revolving credit lines from $3,000 to $100,000, which were marketed as a way for customers to finance home renovations or consolidate credit card debts. The news sparked outrage among consumers and advocates after Wells Fargo warned that the change could impact customers’ credit scores.
Banks don’t often conduct closures like this, and if you’re a Wells Fargo customer with a personal line of credit, you may be wondering how the change could impact your financial health. Here are a few answers.
Why is Wells Fargo shuttering these accounts?
“As we simplify our product offerings, we made the decision last year 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,” a spokesperson for the bank said in a statement.
The shuttering of another financial product by Wells Fargo CEO Charles Scharf comes after a tumultuous few years of federal investigation. In late 2017, the Federal Reserve imposed a cap on the bank’s assets — essentially preventing it from growing its balance sheet. The move came after an investigation revealed that Wells Fargo employees had opened checking and savings accounts without customers’ knowledge. Account-holders were also forced to pay millions in credit and mortgage fees. In February 2020, the bank agreed to pay a $3 billion settlement to the Securities and Exchange Commission and the Justice Department, and the asset cap remains active until repairs to the compliance issues tied to the fake account scandal are completed.