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Wells Fargo shuts down personal lines of credit. Here's how it impacts you | FOX43 Finds Out

The bank has stopped several borrowing options in recent years. FOX43 Finds Out if it's because of the COVID-19 pandemic or fallout from the fake account scandal.

SAN FRANCISCO — Wells Fargo has shut down personal lines of credit. 

FOX43 Finds Out is helping you weed through the financial jargon of this one to understand what it all means. 

What is a personal line of credit and who uses it? 

A personal line of credit is one way to borrow money. 

You can typically get as much cash as you want and pay it back on your own timeline, with an interest rate that can change over time.

It can be used for everything to pay off a debt to home improvement projects. 

Why is Wells Fargo shutting down this program?

Remember when Wells Fargo employees opened fake accounts in customer's names a few years ago?

Jeffrey Guindon, a Financial Advisor and Managing Member with Carriage Hill Investment, says this is happening because the Federal Reserve put limits on how big Wells Fargo can grow after that scandal.

"They haven't said we're ending these business lines because we can't grow and we have caps on our business, but the general consensus is they're taking these actions because of these limits," said Guindon. 

A Wells Fargo spokesperson sent us the following statement: "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 providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs."

The spokesperson also said 40% of customers with personal lines of credit had a balance.

How does this impact me?

Well, it depends. 

Wells Fargo won't tell us how many people currently have personal lines of credit, but if you're one of them, financial advisors say you'll have to pay the money you borrowed at a fixed rate and you should be checking your credit score. 

Guindon said, "This can create a lot of problems for some people."

Experts say it doesn't look like this is the start of any sort of financial crisis and people who have personal lines of credit with other banks don't have to worry.

"This looks like it's only Wells Fargo at this point and there's no indication that other banks will follow through. I would think that other banks would be excited for this because that means for business for them," said Guindon.

The financial advisor says good business for banks could mean better rates for you.

"Go shop around. There are lots of banks. Banking is very competitive."

Guindon said people need to stop being so loyal to their banks, just because you've been a customer for 30 years, doesn't mean you're getting the best deal.

Keep in mind that every few years, it could be a good time to shop around.

If you have a story you want Jackie to look into, FOX43 wants to find out. Send her a message on Facebook or send an email to FOX43FindsOut@FOX43.com. 

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