Wells Fargo customers have begun receiving notification that their personal line of credit accounts will close, and the company confirmed Thursday that it will no longer offer the product. Once the accounts are closed, customers will no longer be able to draw from them.
The company announced that it would discontinue the product last year, said Wells Fargo spokesperson Manuel Venegas in an emailed statement. But if the looming closure of your account is news to you, it may be an unwelcome surprise.
Not only will the accounts close, but Wells Fargo also indicated consumers’ credit scores may take a hit as a result.
“We realize change can be inconvenient, especially when customer credit may be impacted,” Venegas said.
Here’s what you need to know if your account will be closed, how your credit may be affected and other borrowing options to consider.
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What to expect when your account is closed
Customers will receive 60 days’ notice ahead of their account closure, Venegas said in the statement, along with reminders leading up to it. This could be a signal that it’s time to stop making withdrawals and turn your attention to repayment.
Once the account is closed and you can no longer draw from it, your annual percentage rate will be frozen and that’s the rate you’ll pay on the remaining balance, Venegas confirmed.
The revolving lines of credit, offered in amounts from $3,000 to $100,000, could be used by Wells Fargo customers to consolidate high-interest debt and pay for large expenses.
He also confirmed that no other Wells Fargo products are affected, and it will continue to offer credit cards and personal loans.
How your credit score could be affected
The effect of a Wells Fargo line of credit depends on your unique credit profile, said Tommy Lee, principal scientist for the FICO data and credit scoring company, in an emailed statement.
Several factors affect your credit score, and your available credit compared to credit used has a big influence. If you have multiple open credit cards with high limits and low balances, then the impact should be low. But if your other accounts have low limits and high balances, it could hurt.
“When a line of credit is closed, some of your available credit is off the table,” Lee said. "The lower your ratio of balances to your total credit limits, the better with respect to your FICO score.”
Closing an account also reduces your average age of accounts and your number of accounts, both of which have a smaller influence on your score.
How to protect your score
- Pay all bills on time. Payment history is the largest factor in credit scores.
- If you need to replace your line of credit, be strategic. If you’ve applied for credit recently, you may want to wait a few months because multiple applications in a short time can lower scores.
- Keep an eye on your credit reports to be sure the Wells Fargo change is being reported correctly. You have free, weekly access to your credit reports by using annualcreditreport.com.
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A beginner's guide to crypto lingo
Bitcoin
Bitcoin is a cryptocurrency created in 2009 by an unknown person (or people) using the alias Satoshi Nakamoto. Unlike traditional currencies such as the US dollar, bitcoin isn't controlled by a bank or government. Bitcoin is by far the most valuable and popular cryptocurrency in use today.
Blockchain
A blockchain is a digital ledger and the key technology underpinning most cryptocurrencies, non-fungible tokens (more on those later) and other unique digital items.
Blockchain can be used to store all kinds of information, but so far its most common use is in recording cryptocurrency transactions. Once a transaction is made, it's entered on this public ledger, which is managed by a global peer-to-peer network — millions of computers, in bitcoin's case.
Blockchain is fundamental to bitcoin's appeal: As a decentralized database, it can't be controlled by any one person or group — unlike a fiat currency such as the US dollar, which is managed by a central bank.
Buy the f****ing dip (BTFD)
A rally cry for crypto bulls that urges investors to buy coins when prices drop.
Coinbase
The leading cryptocurrency exchange platform. The company went public in April, an event that many viewed as a turning point in the story of cryptocurrencies' journey into the mainstream marketplace.
Cryptocurrency
An all-digital money system made up of "coins" or "tokens" that are controlled by a decentralized ledger.
Dogecoin
The oddball of the crypto family began as a joke based on the "doge" meme in 2013. But as cryptos have broadly gained mainstream interest, dogecoin has emerged as an unexpected heavy hitter. It now has a market cap of more than $30 billion and it has surged more than 5,000% so far this year. And unlike its more popular brethren, a single dogecoin is still cheap — it hit an all-time high of about 45 cents in April. Whether or not its a smart investment remains an active question.
Elon Musk
Tesla CEO whose tweets have been known to spark rallies in cryptocurrencies such as bitcoin and dogecoin.
Ethereum
An open-source blockchain-based software that controls the cryptocurrency Ether. It is the second-largest digital currency by market cap at nearly $300 billion.
FUD ("fear, uncertainty, doubt")
In crypto parlance, FUD refers to negative information that weighs on an asset's value.
Mining
The complicated process by which new bitcoins are entered into circulation. Mining is not for amateur enthusiasts: It requires high-powered computers that solve complex mathematical puzzles to create a new "block" on the blockchain.
The mining process eats up a lot of computing power and electricity, which has led to concerns about bitcoin's environmental impact.
NFT
Non-fungible tokens, or NFTs, are pieces of digital content linked to the Ethereum blockchain. "Non-fungible" essentially means one-of-a-kind, something that can't be replaced, unlike, for example, a dollar bill that you can replace with any other dollar bill. In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets.
Satoshi Nakamoto
The pseudonym that refers to the person (or people) who invented bitcoin. Their real identity remains unknown.
Satoshis, aka "Sats"
The smallest unit of bitcoin ever recorded on the blockchain, equal to one one-millionth of a bitcoin.
Wallet
Like the physical thing you carry your cash and cards in, a wallet in the crypto world is a place to store digital currency. The main thing you need to know about wallets is that you must never, ever lose or forget your password.