Wells Fargo has started informing customers that they will no longer offer personal lines of credit, as all existing lines will be closed in the coming weeks.
In a six-page letter to customers obtained by CNBC, Wells Fargo said it had “recently reviewed its product offerings and decided to stop offering new personal and portfolio lines of credit accounts and close all existing accounts” instead of focusing on credit cards and personal loans.
The revolving credit limits had been a popular product for consumer lending, enabling customers to consolidate credit card debt with higher interest rates, avoid overdraft fees on checking accounts, and other actions.
The lines of credit usually allowed customers to borrow anywhere from $ 3,000 to $ 1
In a FAQ section of the letter, the bank explained that the account closures “may have an impact on your credit score,” adding that they could not be reviewed or reversed.
“We apologize for the inconvenience this credit closure will cause,” the bank told CNBC. “Account closure is final.”
In a statement sent to CNBC after the original report was published, a spokesman for Wells Fargo said, “We are aware that changes can be cumbersome, especially when customer credit can be affected,” adding that the bank was “committed to helping each customer find a credit solution that fits their needs.”
According to the news committee, Wells Fargo said customers will be notified 60 days before their account closes, with remaining balances requiring minimum payments at a fixed interest rate.
The Hill has reached out to Wells Fargo for more information.
The move comes as Wells Fargo has often tried to offset the losses it suffered when it was revealed in 2016 that the bank charged fees on millions of accounts opened without customer consent or sold in a misleading manner.
In 2018, the Federal Reserve imposed the bank’s asset capital to limit its ability to expand its balance sheet until it addressed the incorrect accounts and practices.
That same year, Wells Fargo agreed to pay $ 1 billion. $ In a settlement of charges that the bank had charged inappropriate fees on mortgage lenders and forced loan customers to buy car insurance.