Wells Fargo Closing Line Of Credit Accts for Minnesotans
Well, this is less than stellar news. Apparently Wells Fargo is going to be stopping all personal lines of credit. It was a easy way to get some extra money to pay for home improvements, or a medical bill, or some other unexpected expense that would come up. But now- that is ending. I have taken advantage of that perk myself from time to time and it was really easy thing to do when needed.
According to USA TODAY, Wells Fargo is planning to close these accounts and people who have some balances still out will receive a fixed rate and minimum payment until the debt is paid. The bigger problem with this is the fact that if the bank closes those accounts, it could and probably will affect your credit score. Closing accounts is never a great idea. Even if you are the one doing it, or if it was totally out of your control, like this one. It's not that you were delinquent or anything. It's just closed.
The accounts that this change is affecting is just the personal lines of credit. If you have a credit card or some kind of a regular personal loan, that will not change. In fact, this change is supposed to allow the bank to focus more on the credit cards that they offer and their personal loans. It's the line of credit that people get that is generally attached as a home equity line of credit. Previously, it was easier to get one of those because there was no appraisal needed. A regular loan would need an appraisal with that expense turned to the customer. So the line of credit was a more desired way to get the loan. Plus, you could dip into it whenever it was needed.
Why is this happening? As mentioned above- to focus on credit cards and personal loans and also, from USA Today:
The move comes after the Federal Reserve barred the bank from growing its balance sheet until it fixed compliance issues that stem from the bank’s fake accounts scandal. Last year, the bank announced it would no longer offer home equity lines of credit and later said it would stop making auto loans to most independent car dealerships.
Honestly, the biggest bummer I find with this is the impact to a credit score. That is such a huge deal. It can affect your insurance rates, and other things that you wouldn't normally think would be impacted. But it can.
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