Wells Fargo abandons personal credit lines
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Not so long ago, Wells Fargo was in trouble for opening accounts its customers didn't want. Now, having seen the error of its ways, it has decided instead to close accounts its customers do want.
Driving the news: Wells is shutting down all existing personal and portfolio lines of credit, after last year deciding it would stop issuing new home equity credit lines.
What they're saying: "We apologize for the inconvenience this Line of Credit closure will cause," the bank is saying in a letter to its customers obtained by CNBC. "The account closure is final."
Between the lines: Wells Fargo is keeping all its credit card accounts, which generally carry much higher interest rates. Personal lines of credit are often used as a way to pay down credit card balances and reduce total interest payments.
The big picture: Offering personal loans to customers used to be a core part of what any self-respecting bank had to do. But those loans tend to be labor-intensive and not very profitable, and new online banks can get millions of customers without having any loan products at all.
The bottom line: Banks have for decades tried to steer customers into lucrative credit cards rather than staid personal loans. But it's still shocking to see one of America's big four consumer banks getting out of personal credit lines entirely — especially when many customers used those lines as a way of avoiding overdraft fees.
