Wells Fargo has decided to allow some customers to keep their personal lines of credit, partially reversing a controversial decision after a month of outrage from consumers and advocates.
The bank last month decided to shut down all of its existing personal lines of credit, which Wells Fargo noted could hurt customers’ credit scores. A spokeswoman for the bank said Wells Fargo changed its mind … sorta.
“We heard feedback from our customers and that feedback is very important to us,” the spokeswoman said. “We are responding by ensuring customers can keep these lines of credit open.”
Only customers who have been using their lines of credit can continue to maintain them, the bank said. Wells Fargo customers who haven’t borrowed against their credit lines over the past 12 months have to call the bank or use their line or credit to maintain it. Other inactive customers’ accounts will be closed on December 2. CNBC first reported the news.
Wells Fargo said last month it had decided to shut the lines of credit as part of a strategic review. The bank determined that other lending products better served customers, and it stopped opening new lines of credit for customers in May 2020.
Lines of credit are a popular way for customers to get loans for big purchases, such as home renovations. They can also help customers consolidate credit card debt at a lower rate. Wells Fargo had offered customers credit lines of up to $100,000, CNBC reported. The bank started notifying existing customers a month ago that it had planned to close those credit lines.
Losing access to that line of credit could be damaging to customers’ credit scores, since closed accounts and the total amount of credit factor into consumers’ credit history.
The news was met with ire on social media. Wells Fargo was trending last month following CNBC’s initial report, with consumer advocates, including Senator Elizabeth Warren, expressing outrage.
The news comes more than four years after a scandal erupted in which the bank admitted to opening millions of fake accounts, as well as forcing customers to pay for unneeded auto insurance or charging unnecessary mortgage fees. The Federal Reserve called it “widespread customer abuse,” and in 2018 the central bank imposed a cap on Wells Fargo’s assets — essentially barring the it from increasing its balance sheet until it addresses the compliance failures that led to the scandal.
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