A pedestrian wearing a protective mask walks past to Wells Fargo & Co. bank branch in New York, United States, on Thursday 9 July 2020.
Peter Foley | Bloomberg | .
Wells Fargo is putting an end to a popular consumer lending product, angering some of his clients, learned CNBC.
The bank it’s closing down all existing personal lines of credit in in the coming weeks and no longer offers the product, according to customer letters reviewed by CNBC.
The revolving credit lines, which in generally allow users to take in loan $ 3,000 to $ 100,000, were presented as a way consolidate higher- credit interest -card debt, to pay for home renovations or avoid overdraft fees on linked current accounts.
“Wells Fargo recently revised its product offering and decided to discontinue the offering new Personal Line and Portfolio of credit the accounts and close all existing accounts “, the bank She said in the six- page letter. The move I would leave bank focus on credit cards and personal loans, he said.
Wells Fargo CEOgo Charles Scharf was forced to make it difficult decisions during the pandemic, downloading assets and deposits and steps back from some products because of restrictions imposed by the Federal Reserve. In 2018, the Fed prevented Wells Fargo from growing its balance sheet until . fixes lack of compliance disclosed by the bank The fake accounts scandal.
The asset the cap has at the end cost the bank billions of dollars in lost earnings, based on the budget growth of rivals including JPMorgan Chase and Bank of America over the past three years, analysts have She said.
It has also impressed customers of Wells Fargo: Last year, the lender told the staff that he was shutting everything down new home capital lines of credit, CNBC reported. Months later, the bank also withdrawn from a segment of the auto loan business.
With his latest move, Wells Fargo has warned customers that account closures “could have an impact on your credit score, “according to a segment of frequently asked questions of the letter.
Another part of the FAQ stated that account closures could not be reviewed or undone: “We apologize for the drawback of this line of The closing of the credit will be cause, “the bank She said. “Closing the account is final. “
Wells Fargo no directly answer the questions about what? role, if applicable, the Fed asset cap played in his latest move.
The bank issued this statement: “In an effort to simplify our product offering, we have made the decision no longer offer personal lines of credit as we believe we can better meet your loan needs of our customers through credit card and personal loan products “.
Customers have been given 60 days notice that their accounts will be closed and remaining balances will require regular minimum payments, according to the statement.
The move it’s strange one given the situation in the banking sector need increase the loan growth.
After a blowout of commercial loan during the first few days of the pandemic, loan growth has been hard gather. Companies have used money lifted up in warehouse e debt release to go in pension bank credit lines and blocked consumers a home he had fewer reasons for use credit cards.
In fact, last year big the banks have experimented first aggregate drop in loans in more of a decade, second at Barclays bank analyst Jason Goldberg. Of the four largest US banks, Wells Fargo has seen the worst decline.
After the banks saw that the borrowers were holding up much better than they had initially feared, the industry has recently started marketing new credit cards with great sign-on bonus in an effort to increase the loan.
Wells Fargo does not disclose how many customers have used the lines of credit it is eliminating. It had 24.9 billion dollars in loans in a category referred to as “other consumer” such as of March, which was 26% lower than the year- previous period.
One client said the change is pushing him to do so switch banks later more a decade with Wells Fargo. Tim Tomassi, a programmer from Portland, Oregon, said he used a personal line of credit linked to your current account a avoid expensive overdraft fees.
“It’s a bit upsetting,” said Tomassi in a telephone interview. “I’m a big bank, and I’m a small person, and feels like they are doing decisions for their bottom line and not for customers. A lot of people we are in my position, them need a pillow every time in a bit from a line of credit.”
Tomassi said he is thinking of opening an account with Ally or Chime, bancariome players that do not charge overdraft fees.
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