In the coming weeks, Wells Fargo will shut down all existing personal lines of credit and will no longer offer the consumer lending product anymore, CNBC reported.
“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, CNBC quoted. From this move, the bank would focus on credit cards and personal loans.
Wells Fargo gives $3,000 to $100,000 in revolving credit lines, which were pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts, the CNBC report said.
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CNBC said that Wells Fargo’s customers have been given a 60-day notice after which their accounts will be shuttered.
In its Frequently Asked Questions session, Wells Fargo said that the account closures might impact customers’ credit scores.
The asset cap has ultimately cost the bank billions of dollars in lost earnings, based on the balance sheet growth of rivals including JPMorgan Chase and Bank of America over the past three years, analysts have said.
Wells Fargo, in another part of the FAQ, said that account closure is final and couldn’t be reviewed or reversed, “We apologize for the inconvenience this Line of Credit closure will cause.” “The account closure is final.”
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The announcement comes nearly a year after the bank suspended home equity loans amid the economic uncertainty fuelled by the COVID-19 pandemic. The bank had also stopped giving loans to a majority of its independent auto dealer customers last year.
Amid the pandemic, Wells Fargo was forced to start offloading its assets, deposits and stepping back from some products. The move of offloading assets resulted in the bank ultimately cost the bank billions of dollars in lost earnings, the CNBC report said.
