Wells Fargo is discontinuing all existing personal lines of credit, a move that could impact consumers’ credit scores, CNBC reported Thursday.
The bank’s revolving credit lines, which typically allow consumers to borrow between $3,000 and $10,000, will be shutting down over the next few weeks, according to customer letters reviewed by CNBC.
In the letter, Wells Fargo said it had “recently reviewed its product offerings and decided to discontinue offering new personal and portfolio line of credit accounts and close all existing accounts,” The Hill reported. Instead, the bank will focus on credit cards and personal loans.
The revolving lines of credit were marketed as a way for consumers to consolidate higher-interest credit card debt, finance home renovations or avoid overdraft fees on linked checking accounts, according to CNBC.
Customers were notified that the accounts will be shut down in 60 days, the network reported. Any remaining balances will require minimum payments at a fixed rate.
Wells Fargo also notified customers that the account closures “may have an impact on your credit score,” according to CNBC.
A spokesperson for the bank said Wells Fargo made the decision last year as part of an effort to simplify its product offerings, CNN reported.
The move comes after the Federal Reserve’s 2018 decision to bar Wells Fargo from growing its balance sheet until it fixed compliance issues that stem from the bank’s fake accounts scandal, USA Today reported. The bank announced in 2020 that it would no longer extend home equity lines of credit, and then said it would halt making automobile loans to most independent car dealerships, the newspaper reported.
Wells Fargo paid $3 billion in February 2020 to settle investigations into fake accounts by the Justice Department and the Securities and Exchange Commission, The Wall Street Journal reported.
In the letter, Wells Fargo said account closures could not be reversed, CNBC reported.
“We apologize for the inconvenience this line of credit closure will cause,” the bank said. “The account closure is final.”
In a statement sent to CNBC, a Wells Fargo spokesperson said, “We realize change can be inconvenient, especially when customer credit may be impacted.” The spokesperson added that the bank was “committed to helping each customer find a credit solution that fits their needs.”
Consumer advocates, including U.S. Sen. Elizabeth Warren, D-Mass., were angered by the bank’s decision.
“Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” Warren tweeted. “Sending out a warning notice simply isn’t good enough — Wells Fargo needs to make this right.”
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