Wells Fargo Closes All Personal Credit Accounts

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A pedestrian wearing a protective mask walks past a branch of Wells Fargo & Co. in New York, USA on Thursday, July 9, 2020

Peter Foley | Bloomberg | Getty Images

Wells Fargo is stopping distribution of its popular consumer lending product, which has angered some of its customers, CNBC has learned.

According to letters from customers reviewed by CNBC, the bank is closing all existing personal credit lines in the coming weeks and no longer offering the product.

Revolving lines of credit, which typically allow users to borrow $ 3,000 to $ 100,000, have been presented as a way to consolidate higher interest credit card debt, pay home renovations, or avoid overdraft fees on linked checking accounts.

“Wells Fargo recently revised its product offerings and decided to stop offering new personal and portfolio credit accounts and close all existing accounts,” the bank said in a six-page letter. The move will allow the bank to focus on credit cards and personal loans, he said.

CEO Wells Fargo Charles Scarf was forced to make difficult decisions during pandemic coronavirus, unloading assets and deposits and the abandonment of certain products due to restrictions imposed by the Federal Reserve. In 2018, the Fed banned Wells Fargo from increasing its balance sheet until it corrects the weaknesses identified fake bank account scandal

The asset limitation ultimately cost the bank billions of dollars in lost profits based on the growing balance sheet of competitors, including Jp morgan chase as well as Bank of America over the past three years analysts said

It also impacted Wells Fargo customers: last year, the lender told staff that it was stop everything new lines of credit secured by home equity, CNBC reported. A few months later, the bank also exited the segment car loans

In its final move, Wells Fargo warned customers that account closings “could affect your credit score,” according to the FAQ section of the letter.

Another part of the FAQ stated that account closings could not be revised or canceled: “We apologize for the inconvenience that the closure of the credit line will cause,” the bank said in a statement. Closing the account is final.

‘Simplify sentences’

Making a switch

Wells Fargo did not disclose how many customers have used the lines of credit it will liquidate. It was $ 24.9 billion on loans in the category “other consumers” as of March, which is 26% lower than a year earlier.

One client said the change prompted him to change banks after more than a decade at Wells Fargo. Tim Tomassi, a computer programmer in Portland, Oregon, said he used a personal line of credit linked to his checking account to avoid costly overdraft fees.

“It’s a little frustrating,” Tomassi said in a telephone interview. “This is a big bank, and I am a small person, and it seems to me that they make decisions for their own profit, and not for the sake of clients. Many people are in my place, they need a pillow every time. some time on a line of credit. “

Tomassi said he is considering opening an account with Ally or Chime, banking players who do not charge overdraft fee

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