Wells Fargo is reversing an unpopular decision to shutter personal lines of credit for its customers.
Last month, CNBC reported that the bank had informed customers that the revolving credit lines would be closed after a product review. In a six-page letter, the bank warned that the actions could impact users' credit scores, a possibility that agitated some people.
The decision drew criticism from consumers who lean on the product as well as Sen. Elizabeth Warren, a frequent critic of the banking industry. Wells Fargo has dealt with a series of reputational blows after it was revealed in 2016 that employees had improperly opened millions of fake accounts.
Now, the bank has decided to keep the credit lines available for those who actively used them or want to reactivate old ones, according to a spokeswoman for the San Francisco-based company. It will not offer the product to new customers, however.
After the CNBC report published last month, customers asked the bank to keep their accounts open to avoid inconvenience, according to a person with direct knowledge of the situation. Another consideration was the potential impact on credit scores, said the person, who declined to be identified speaking about the bank's internal deliberations.
Of the customers with personal lines of credit, 60% actively used them, while the rest hadn't in the past 12 months, said the person.
The bank has begun sending letters to customers informing them of the company's change of heart, the person said.
Here is the bank's full statement:
As part of our strategic review of businesses last year, we determined that our suite of other consumer products serve our customers better than personal lines of credit. As a result, we ceased opening these lines in May 2020, and recently notified customers that we planned to close existing lines. We heard feedback from our customers and that feedback is very important to us; we are responding by ensuring customers can keep these lines of credit open.
For customers who have been using their lines, we are informing them that their lines remain open and they can continue to use them. For customers whose accounts have been inactive for the past 12 months, if they would like to keep their lines open, they can call us or simply use their line. For those inactive customers who do not activate their lines in one of these ways, accounts will be closed on December 2, 2021.
Beginning August 17, we have been communicating with all customers who received the earlier letters to inform them of this change, using both email and written letters.
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