Wells Fargo has announced it will cease to offer personal lines of credit and plans to shut down existing ones in a matter of weeks. The change is likely due to fiscal pressure from regulators in the wake of the bank's 2018 fake accounts scandal.
The bank's popular consumer lending program lets users borrow between $3,000 and $100,000, typically at lower interest rates than credit cards. With a personal line of credit, borrowers can withdraw what they need up to a certain limit, rather than receive a lump sum, as with a personal loan, and repay what they owe without a fixed monthly payment. A PLOC can be open for an indefinite amount of time or expire after a set number of years.
Personal lines of credit are often used to consolidate higher-interest credit card debt, pay for home renovations, and avoid overdraft fees on linked checking accounts.
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Wells Fargo borrowers will see their accounts shuttered within 60 days, and any remaining balances will require minimum payments at a fixed rate. The bank's warning that account closures "may have an impact on your credit score" drew condemnation from Sen. Elizabeth Warren, D-MA, among others.
"Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence," she wrote on Twitter. "Sending out a warning notice simply isn't good enough – Wells Fargo needs to make this right."
"We realize change can be inconvenient, especially when customer credit may be impacted," a Wells Fargo spokesperson told CNBC.
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