Wells Fargo abandons personal lines of credit
Not so long ago, Wells Fargo was in trouble for opening accounts that his clients did not want. Now, after seeing the error of his means, he has instead decided to close the accounts his clients want.
What they say : “We apologize for the inconvenience caused by this line of credit closure,” the bank said in a letter to clients obtained by CNBC. “The closure of the account is final.”
Between the lines: Wells Fargo maintains all of its credit card accounts, which typically carry much higher interest rates. Personal lines of credit are often used as a way to pay off credit card balances and reduce total interest payments.
The big picture: Providing personal loans to customers was once at the heart of what any self-respecting bank had to do. But these loans tend to be labor intensive and unprofitable, and new online banks can attract millions of customers without any loan products.
The bottom line: Banks have tried for decades to steer customers into lucrative credit cards rather than dedicated personal loans. But it’s still shocking to see one of America’s Big Four consumer banks completely withdraw from personal lines of credit, especially when many customers have used those lines to avoid overdraft fees.