Not too long ago Wells Fargo was in trouble his clients did not want to open accounts. Now, seeing the mistake of his path, he decided instead to close the accounts that his clients really need.
What they say: “We apologize for the inconvenience that the closure of the line of credit may cause,” the bank said in a letter to its clients received by CNBC. Closing the account is final.
Between the lines: Wells Fargo maintains all of its credit card accounts, which typically have much higher interest rates. Personal lines of credit are often used as a way to pay off credit card balances and reduce overall interest payments.
Big picture: Giving personal loans to customers used to be a core part of what any self-respecting bank had to do. But these loans tend to be labor intensive and not very profitable, and new online banks can attract millions of customers without having any loan products at all.
The essence: Banks for decades have tried to attract customers to lucrative credit cards rather than permanent personal loans. But it is still shocking that one of America’s four largest consumer banks is ditching personal lines of credit entirely, especially when many clients have used those lines as a way to avoid overdraft fees.