A month after Wells Fargo made news for its decision to close customers’ existing personal lines of credit, the bank has changed course and will leave the lines open.
The company began notifying customers of the update by email and mailed letters Tuesday, according to an emailed statement from Wells Fargo.
No new personal lines of credit will be opened — that decision was made more than a year ago — but existing credit lines will still be serviced.
Feedback from customers who didn’t want to see their lines of credit closed prompted the reversal, a spokesperson says.
“We heard feedback from customers and that feedback is very important to us,” the emailed statement said.
When Wells Fargo announced the closures, the company warned customers that their credit scores could be impacted, prompting backlash on social media, including a tweet from Democratic Sen. Elizabeth Warren of Massachusetts, calling on Wells Fargo to “make this right.”
Your available credit compared with the amount you use is a big factor in deciding your credit score, so cutting off one credit line could weigh heavily in that calculation.
What customers need to do
If you have an active Wells Fargo personal line of credit, you don’t need to do anything. If it hasn’t already, the company will notify you that your account will remain open and you can continue to use it.
Customers with accounts that have been inactive for a year or longer will need to either use the line of credit to show account activity or contact Wells Fargo by Nov. 30 to keep it open. If not, the company will close inactive accounts on Dec. 2, the spokesperson says. Those customers will receive a separate email and mailed letter with instructions.
Customers who closed their line of credit in response to the bank’s earlier announcement and want to reopen it should contact the company.
Compare borrowing options
Of your unsecured borrowing options, personal lines of credit are the rarest — some banks still offer them, but they’re not as common as credit cards and personal loans. If you’ve already closed your Wells Fargo account, now may be the time to shop around before reopening it.
Like a personal line of credit, you don’t need collateral or a reason to get a personal loan or credit card. The big differentiator between the latter two is their repayment structure. Compare these options to decide which is best for your plans.
Credit cards offer similar flexibility to a personal line of credit, and they may come with rewards and work well for regular daily or monthly expenses. Just be sure you can pay the balance each month to avoid paying interest.
Personal loans are structured like a line of credit that’s in repayment. You borrow the money in a lump sum and repay it in fixed monthly installments. Personal loans also let you pre-qualify to see what interest rate and monthly payments you qualify for, without affecting your credit score.