Faced with backlash, Wells Fargo allows some customers to keep their lines of credit :: WRAL.com
CNN – Wells Fargo has decided to allow some customers to keep their personal lines of credit, partly reversing a controversial move after a month of outrage from consumers and advocates.
The bank decided last month to close all of its existing personal lines of credit, which Wells Fargo says could hurt customers’ credit scores. A spokeswoman for the bank said Wells Fargo had changed its mind… sort of.
“We have heard feedback from our customers and that feedback is very important to us,” said the spokesperson. “We are responding by making sure that customers can keep those lines of credit open.”
Only customers who have used their lines of credit can continue to maintain them, the bank said. Wells Fargo customers who have not borrowed on their lines of credit in the past 12 months should call the bank or use their line or credit to maintain it. Other inactive client accounts will be closed on December 2. CNBC first reported the news.
Wells Fargo said last month it decided to close the lines of credit as part of a strategic review. The bank determined that other loan products were serving customers better and stopped opening new lines of credit for customers in May 2020.
Lines of credit are a popular way for customers to get loans for large purchases, like home renovations. They can also help customers consolidate their credit card debt at a lower rate. Wells Fargo had offered its customers lines of credit of up to $ 100,000, CNBC reported. The bank began advising existing customers a month ago that it planned to close those lines of credit.
Losing access to this line of credit could adversely affect customers ‘credit scores, as closed accounts and the full amount of credit factor into consumers’ credit history.
The news was greeted with anger on social media. Wells Fargo was all the rage last month after 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 unnecessary car insurance or charge 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 preventing it from increasing its balance sheet until it remedies the lack of conformity which led to the scandal.
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