The banking sector fell lower following a controversial move made by one of its key players on Thursday, with Wells Fargo
Wells Fargo told customers on Thursday that it is terminating all existing personal lines of credit in two months and will no longer offer the product, according to a letter sent to customers, reviewed by CNBC. The bank plans instead to focus on credit cards and personal loans.
The bank gave this statement on the account closures: "In an effort to simplify our product offerings, we've made the decision 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."
Personal credit lines often allow users to borrow amounts between $3,000 to $100,000, which are suggested by banks like Wells Fargo as a way to consolidate high-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts, CNBC reports.
Wells Fargo is still recovering from its account fraud scandal brought to light in 2016, when the bank opened millions of fraudulent savings and checking accounts on the belief of clients without their consent. The scandal continues to have legal and financial ramifications for the bank, as well as remaining a considerable consumer controversy.
More recently, Wells Fargo shuttered all new home equity lines of credit and halted a segment of its auto lending business. This new move by the lender may be the breaking point for some customers, especially since the revolving credit account closures may impact their credit scores, according to Wells Fargo.
Customers have been given a 60-day notice that their accounts will be closed, and remaining balances will require regular minimum payments, according to the statement.
"Not a single Wells Fargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence," Senator Elizabeth Warren tweeted Thursday evening. "Sending out a warning notice simply isn't good enough--Wells Fargo needs to make this right."
Wells Fargo stock fell over 1.5% on Thursday, along with other banks like JPMorgan Chase
