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Bank analyst weighs in on Wells Fargo’s move to halt personal lines of credit

Wells Fargo & Co. is shutting down personal lines of credit in the coming weeks, according to a CNBC report.

Wells Fargo said the decision would allow it to focus on credit cards and personal loans, a separate product. Customers have been given a 60-day notice and will receive multiple reminders. Decisions are final. The bank said closures could affect customers’ credit scores, according to a letter cited in the CNBC report.

The San Francisco-based bank did not specify how many borrowers would be affected. The revolving credit lines, billed as an option for home improvement or debt consolidation, range from $3,000 to $100,000.

“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 ... committed to helping each customer find a credit solution that fits their needs,” Wells Fargo said in a statement obtained by the Charlotte Business Journal.

Dick Bove, an analyst at Odeon Capital Group, said he thinks this decision is related to the asset cap. Wells Fargo said it is not. The Federal Reserve levied that cap in 2018, following a fake-accounts scandal where millions of accounts were created without customers’ knowledge in a toxic sales environment. Years later, the bank continues to face backlash from regulators and customers. Problems were uncovered across multiple business lines.

Read more here.

(Watch Below: Wells Fargo discontinuing all personal lines of credit)