Wells Fargo Shutting Down Personal Lines Of Credit: What It Means To Consumers

Wells Fargo & Company WFC has informed its consumer customers that it will cease offering personal lines of credit.

End Of The Line: The bank's decision, which was first reported by CNBC, was announced in a six-page letter sent to customers. All existing personal lines of credit will be shuttered within the next 60 days and remaining balances will be shifted to a regular minimum payment schedule at a fixed rate.

"Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts," the bank said in its letter, adding that it will place a greater emphasis on credit cards and personal loans.

The bank stated that it would not revisit its decision, stating that "account closure is final," and it also warned customers that account closures "may have an impact on your credit score."

What This Means: The product, which enabled customers to borrow $3,000 to $100,000 at interest rates ranging from 9.5% to 21%, was marketing as a strategy for consolidating credit card debt and paying for home repairs and renovations.

The bank doesn't provide data on the number of consumers using the personal line of credit product, although CNBC noted that Wells Fargo had $24.9 billion in loans in a category called "other consumer" as of March, down 26% from a year ago.

This is the latest product that Wells Fargo has shut down. Last year, the bank ceased offered new home equity lines of credit and withdrew from originating auto loans.

After the news of its decision was first reported, Wells Fargo issued a press statement that said, "As we simplify our product offerings, we made the decision last year to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products.

"We realize change can be inconvenient, especially when customer credit may be impacted. We are providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs."

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Reaction: Wells Fargo's decision brought an angry response from Sen. Elizabeth Warren (D-MA), one of Capitol Hill's loudest critics of the financial services industry.

"Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence," said Warren on Twitter. "Sending out a warning notice simply isn't good enough – Wells Fargo needs to make this right."

Dan Price, CEO of the online credit card processing company Gravity Payments, sarcastically observed the news by tweeting, "It's hard to stand out for being awful when you are a bank but Wells Fargo really does do its best."

Carol Roth,, author of the new book "The War on Small Business," told consumers to reconsider their Wells Fargo relationships.

"Wells Fargo, per its Q1 2021 10-Q: ‘has approximately $1.9 trillion in assets and proudly serves one in three U.S. households,'" she tweeted. "Vote with your dollars, folks."

And Dr. Anthony B. Sanders, distinguished professor of real estate finance in the School of Business at George Mason University, noted the timing of Wells Fargo's announcement was more than a little curious.

"The Federal Reserve released its monthly consumer credit report for May and it's a doozy," he wrote on his Confounded Interest blog. "Non-revolving credit increased the most in history! At the same time, Wells Fargo announced it is shutting down all personal lines of credit. The 10Y/3M and 10Y/2Y Treasury curve continue to tank. Well, that escalated quickly!"

Photo: Ildar Sagdejev / Flickr Creative Commons.