Wells Fargo closes personal lines of credit



The bank has stopped several borrowing options in recent years. FOX43 finds out if it’s because of the COVID-19 pandemic or the fallout from the fake account scandal.

SAN FRANCISCO – Wells Fargo has terminated its personal lines of credit.

FOX43 Finds Out helps you take the financial jargon out of it to figure out what it all means.

What is a personal line of credit and who uses it?

A personal line of credit is one way to borrow money.

You can usually get as much money as you want and pay it back on your own schedule, with an interest rate that can change over time.

It can be used for anything from paying down debt to home improvement projects.

Why is Wells Fargo closing this program?

Remember when Wells Fargo employees opened fake accounts on behalf of clients a few years ago?

Jeffrey Guindon, financial adviser and managing member of Carriage Hill Investment, says this is happening because the Federal Reserve imposed limits on Wells Fargo’s growth after the scandal.

“They didn’t say we were shutting down these lines of business because we can’t grow and we have caps on our business, but the general consensus is that they are taking these steps because of these. limits, ”Guindon said.

A Wells Fargo spokesperson sent us the following statement: “As we simplify our product offerings, we made the decision last year to no longer offer personal lines of credit because we believe we can better meet the borrowing needs of our customers through credit cards and personal loan products. especially when customer credit can be affected. We provide a 60-day notice period with a series of reminders before closing, and we’re committed to helping every customer find a credit solution that meets their needs.

The spokesperson also said that 40% of customers with personal lines of credit had a balance.

Wells Fargo won’t tell us how many people currently have personal lines of credit, but if you’re one of them, financial advisors say you’ll have to pay the money you borrowed at a fixed rate and you should check your credit. Goal.

Guindon said: “It can create a lot of problems for some people.”

Experts say it doesn’t appear to be the start of a financial crisis, and people who have personal lines of credit with other banks needn’t worry.

“It looks like it’s only Wells Fargo at this point and there’s no indication any other banks will follow suit. I think other banks would be thrilled because it means business to them,” Guindon said.

The financial advisor says that a good deal for the banks could mean better rates for you.

“Go take the tour. There are a lot of banks. The bank is very competitive. “

Guindon said people have to stop being so loyal to their banks, just because you’ve been a customer for 30 years doesn’t mean you’re getting the best deal.

Keep in mind that every few years this could be a good time to shop.

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