Wells Fargo
"For customers who have been using their lines, we are informing them that their lines remain open and they can continue to use them," the bank wrote in a statement. "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."
Inactive accounts are set to be shut on December 2, 2021.
The move away from personal lines of credit began in 2016 when it came to light that the bank had opened roughly 3.5 million unauthorized accounts; although, intracompany communication regarding the practice was found from as far back as 2002.
As a part of the bank's settlement for these allegations, it agreed to address the compliance issues that allowed these fake accounts to crop up. Until the bank comes into compliance, it is stuck under an asset cap imposed by the Federal Reserve. CNBC estimates that the cap has cost Wells Fargo billions of dollars.
The bank has also been undergoing a process of slimming down under Chief Executive Officer Charlie Scharf. After years of scandal, the bank hoped to improve its profitability by cutting off all inessential business.
In May of 2020, the bank informed customers that they would no longer be opening new lines of credit, instead offering customers choices like a credit card or personal loan. By July of this year, it began notifying account holders that their personal lines of credit would be cut off.
"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 company wrote.
However, customers and lawmakers soon pushed back against the bank's decision, arguing that it would not only inconvenience customers but also potentially impact their credit scores.
"Not a single [Wells Fargo] customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence," Sen. Elizabeth Warren wrote on Twitter
In its initial announcement of the credit closures, Wells Fargo acknowledged that the decision could negatively affect credit scores.
"We realize change can be inconvenient, especially when customer credit may be impacted... [We are] committed to helping each customer find a credit solution that fits their needs."
A bank insider informed CNBC that 60% of the personal lines of credit are being actively used, with the other 40% being left inactive for 12 months or longer.
