Wells Fargo said it will no longer be offering personal lines of credit and will shut down all existing personal lines of credit for customers, according to reports. The move doesn’t appear to affect credit cards.
A spokesperson for Wells Fargo confirmed the development and said the decision to do away with personal lines of credit will allow the firm to focus on its credit card and personal loan services.
“As we simplify our product offerings, we made the decision last year to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products,” a Wells Fargo spokesperson told Fox News and other news outlets.
“We realize change can be inconvenient, especially when customer credit may be impacted,” the spokesperson added. “We are providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs.”
The move affects the bank-offered revolving credit lines, which generally allow customers to borrow between $3,000 and $100,000. For example, personal lines of credit are often used for home renovations.
Personal lines of credit have generally lower interest rates than credit cards and offer higher limits on how much one can borrow. However, they have a set draw period, whereas credit cards can remain open indefinitely—but typically have higher interest rates.
“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 letter obtained by CNBC. The bank will now focus on its credit cards and personal loans, the letter stated. The Epoch Times was not able to independently verify the authenticity of the letter.
In the letter’s frequently asked questions segment, Wells Fargo warned customers that the closures “may have an impact on your credit score.”
“We apologize for the inconvenience this Line of Credit closure will cause,” the San Francisco-based bank said. “The account closure is final.”
Wells Fargo didn’t specifically say why it is shutting down its personal lines of credit. The move may have been triggered by the Federal Reserve’s 2018 decision (pdf) to impose limitations on Wells Fargo’s growth after a scandal involving fake bank accounts. The company also stopped providing new home equity lines of credit last year.
The Epoch Times has reached out to the company for comment and clarification on the company’s decision.