Wells Fargo Way2Save Savings Account Review: 0.01% APY, $25 Minimum Deposit

Wells Fargo is a major bank with 6,000 physical branch locations and 13,000 ATMs. It acquired Wachovia for $15 billion dollars in 2008 and now serves 70 million customers globally. You’ve probably seen Wells Fargo make headlines recently for news that’s a little less pleasant than the huge acquisition.

In 2016, Wells Fargo accepted responsibility for employing sales associates and managers who were opening fake debit and credit card accounts under customer names without their consent to meet sales goals.

Wells Fargo was fined $185 million dollars for the account fraud. The bank refunded $5 million dollars to customers affected and terminated 5,300 employees tied to the misconduct. Wells Fargo announced the removal of sales goals at retail branches to dial back on the aggressive sales culture that led to fraud. And executives went on an apology tour at the end of 2016 to restore consumer faith.

Despite the scandal, Wells Fargo is still one of the largest U.S. banks and offers many products, from savings accounts to mortgage and education loans.

In this post, we’re going to dive into the Wells Fargo Way2Save Savings account to review the terms and how this account could fit into your savings strategy.

Wells Fargo Way2Save Savings Account Basics

The Wells Fargo Way2Save Savings account has the traditional fees and terms that you can expect from a brick-and-mortar bank. There’s a monthly fee if you don’t follow certain rules and a minimum balance required to open the account.

Here’s an overview of the account fees and terms:

  • Minimum deposit required to open an account – $25
  • Annual percentage yield (APY) – 0.01%
  • Monthly fee of $5, unless:
    • You maintain a $300 daily balance, or
    • You set up and maintain monthly automatic deposits of $25 or more into the account
    • You are under the age of 18 or 19 in Alabama

Wells Fargo Way2Save Savings Account Tools

Extra features of the Wells Fargo Way2Save Savings account include tools that encourage you to save more money.

If you sign up for the Save As You Go transfer tool, Wells Fargo will move $1 from your checking account to your savings account every time you:

  • Pay bills through Wells Fargo Bill Pay
  • Make a debit card purchase
  • Make automatic payments from the connected checking account

Let’s say you make 20 qualifying transactions a month. In this scenario, $240 per year will be transferred into your savings account automatically. That can add up.

You can also set up monthly or daily transfers from a linked checking account to your savings account. If you set up monthly transfers, the minimum you can transfer each month is $25.

If you do daily transfers, you have to transfer at least $1.

How to Apply for the Way2Save Savings Account

To apply for a Wells Fargo savings account, you’ll need your:

  • Social Security number
  • Valid ID (driver’s license, state ID, or Matricula card)
  • $25 to deposit (If you already have a Wells Fargo account, you can transfer $25 from it; you can also use a debit or credit card, or check for this deposit.)

Filling out the application gives Wells Fargo permission to pull your credit history. Your application can be denied if you have negative history from other bank accounts like unpaid overdraft fees.

A Comparison of Fees and APY Against Our Top Choice for Savings

The APY offered by Wells Fargo for the Way2Save Savings account is nothing to write home about.

Wells Fargo offers the Way2Save Savings account with just 0.01% APY when other online-only and credit union savings accounts offer as much as 1.05% APY.

We have a roundup of the best savings accounts that we update regularly here for you to check out.

As for fees and account terms, there are also several savings accounts in the roundup we mention above that have the Way2Save Savings account beat.

Wells Fargo charges $5 per month in the event that you can’t maintain the minimum $300 daily balance and you don’t have enough money to set up $25 monthly automatic transfers from checking to savings.

Let’s be real here, life happens, and there may be a situation where you’re in a financial pinch and can’t meet these conditions.

In comparison, the High Yield Savings account from Synchrony is currently our top recommendation and doesn’t have the same fine print. The Synchrony High Yield Savings account offers 1.05% APY with no minimum account balance required and no monthly fees.

APY of the Way2Save Savings account from Wells Fargo vs. High Yield Savings from Synchrony

Both accounts compound interest daily and pay out monthly.

If you keep $1,000 in a Wells Fargo account for 12 months at 0.01% APY, you’ll earn just $2 in interest for the year. Barely enough for a coffee.

If you put $1,000 in the Synchrony High Yield Savings account for a year at 1.05% APY, you’ll earn about $21 in interest. That’s a few mornings worth of Dunkin’ Donuts coffee.

APY-Way2save-2

Of course, this is savings you shouldn’t be using for a caffeine fix, but you get the idea. When your money is sitting in a savings account, it should be earning you as much money as possible.

Downside of Having Savings Connected to Checking

Wells Fargo touts the ease of connecting your Wells Fargo checking account to a savings account as one of the Way2Save Savings account benefits, but that’s not always ideal.

Keeping all of your cash in accounts that are connected to each other may cause you to rely on savings more often than you should. If you’re already a Wells Fargo checking account customer, keeping a Way2Save Savings account for emergencies in addition to an online-only account could be a good savings strategy.

In fact, it’s the strategy that I use as a Wells Fargo customer. I put money that I may need more urgently into the Wells Fargo savings account. The rest I put in a savings account that’s harder to reach. It can be easier to resist temptation and grow savings when money isn’t sitting pretty in an account you have access to instantly.

Should You Open a CD Instead?

To answer this question, CDs can be a good choice. A CD with Wells Fargo — not so much.

A certificate of deposit is an account that you put money into for a certain term, and the money earns interest. During the CD term, you’re not able to deposit any money into the account. You can get charged a fee if you withdraw money before the CD matures. The longer you hold money in a CD account, the more interest you’ll earn.

This type of account is one you may want to open instead of another savings account if you have extra funds that you do not need for a long period of time.

Wells Fargo offers standard and special CDs requiring a minimum deposit of $2,500 to $5,000. These accounts earn 0.01% APY to 0.50% APY plus an interest bonus if you have the CD linked to a Portfolio by Wells Fargo product. Find out more about Wells Fargo CDs here.

Interestingly enough, the APY for Wells Fargo CDs is lower than what you can get from one of the regular high-yield savings accounts we have in our “best of” roundup. You can check out that roundup here.

If you’re shopping for a CD with a more competitive rate and a minimal initial deposit, Ally Bank is a good place to start. Ally Bank has a CD that requires no minimum balance to open and pays out 1.20% APY.

Find out more about Ally Bank CDs here and a roundup of our other favorite CDs here.

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How to Request a Credit Limit Increase With Wells Fargo

Wells Fargo Bank

If you want to continue to increase the amount of credit available to you without constantly applying for more credit cards or loans, requesting a credit limit increase is a reasonable solution. However, like most things in life, there are pros and cons to requesting a credit limit increase.

The pros of requesting a credit limit increase:

There are at least two reasons why requesting a credit limit increase may be a good idea for you. First, since you have already proven yourself as a valued customer, it can be easier and faster to request and receive an increased credit line as opposed to applying for a brand new line of credit. Second, if approved, it can increase the total amount of credit available to you, which can potentially improve your credit score. That’s because your utilization rate — how much credit you’re using vs. how much credit you have access to — makes up 30% of your credit score.

The cons of requesting a credit limit increase:

There are also some downsides to requesting a credit limit increase. First, the request will likely trigger a hard check on your credit, which can lower your credit score by a few points. Second, if you are requesting the increase so that you can spend more each month, the advantage of lowering your credit utilization to improve your credit score would disappear. Additionally, it becomes a slippery slope; the more you spend, the harder it can become to pay off the credit card each month, which could lead to credit card debt.

How a credit limit increase can help raise your credit score even if it initially dips

Any hard checks on your credit will likely result in your credit score dropping a few points temporarily. However, the benefit of an increased credit limit and its impact on your credit score will make up for the few points it dropped from the hard credit check.

The number of hard credit checks on your account is not a huge factor in determining your credit score. What is a huge factor in determining your credit score? Credit utilization. In other words, how much of the credit available to you are you using? Ideally, you want to keep your credit utilization under 20%. An increase in your credit limit will immediately lower your credit utilization percentage. However, this will only be the case if you don’t increase your spending with the increased credit line.

Since your credit utilization has a larger impact on your credit score than the number of hard checks, requesting the credit limit increase is likely to help raise your credit score. As improving your credit utilization will do more to improve your credit score than the hard check would lower your credit score, it’s worth it to ask for a credit limit increase.

How to request a credit limit increase with Wells Fargo

Before asking for a credit limit increase with Wells Fargo, you should make sure you meet the minimum requirements of having an account that is at least a year old. If you don’t satisfy these requirements, then your request is likely to be denied. If they do a hard check on your credit and ultimately deny your request, you will still see the negative impact of a few points from having the hard credit check without the benefit of increasing your credit utilization.

Unfortunately, unlike many other banks these days, Wells Fargo does not have a simple online process to request a credit limit increase. According to the Wells Fargo FAQ, if you want to ask for a credit limit increase, you will need to call 1-800-642-4720. As with any request for a credit limit increase, be prepared to have them run a hard check on your credit and to answer questions regarding your current income level.

You can find the information on the Wells Fargo website by going to the “Loans and Credit” section and then clicking “Credit Cards.”

Then click “See credit card FAQs.”

 

The information on how to increase your credit limit by calling the number mentioned above is listed toward the bottom.

How to improve your chances of getting the credit limit you want

 

While ultimately the decision to increase your credit limit is up to the bank, there are a few things you can do to improve your chances. According to credit card expert Jason Steele, banks like Wells Fargo will “look at your reported income, which would demonstrate your ability to repay the loan. They would also look at the length of your relationship with Wells Fargo, and how long your account has been opened. Finally, they might also look at your payment record, and of course, your current credit utilization.” So by ensuring you have an excellent repayment record and a good relationship with the bank and the accounts you have with them, you can give yourself a better chance of being approved.

When looking at those who received the credit line increase they wanted and those who didn’t, the biggest difference appeared to be how active a customer was with Wells Fargo. Meaning they regularly used their credit card and paid it off, and they also often had another type of account with Wells Fargo, such as a mortgage.

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Wells Fargo CEO Steps Down in Wake of Fake Account Scandal

Wells-Fargo-CEO-retires

Wells Fargo chairman and CEO John Stumpf is relinquishing both of his titles, effective immediately, the bank announced late Wednesday. President and Chief Operating Officer Timothy J. Sloan will replace him as CEO while Lead Director Stephen Sanger will step in as the board’s non-executive chairman.

Stumpf’s retirement follows the recent revelations that Wells employees opened roughly 2 million unauthorized accounts in customers’ names in order to meet aggressive sales goals. The scheme resulted in a $185 million settlement with federal regulators in September and the termination of about 5,300 employees.

Stumpf previously agreed to forfeit about $41 million in unvested equity, temporarily forgo his salary during an internal investigation and not take a bonus for 2016. But pressure for restitution from the bank has remained high since the scandal came to light, with Stumpf taking a thrashing from both the Senate and House of Representatives’ banking committees in September.

These pressures were evident in statements released by the bank alongside news of Stumpf’s departure.

“John Stumpf has dedicated his professional life to banking, successfully leading Wells Fargo through the financial crisis and the largest merger in banking history, and helping to create one of the strongest and most well-known financial services companies in the world,” Sanger said in a press release. “However, he believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the Company forward.”

Stumpf, meanwhile, thanked the bank for the opportunity to serve as chairman and CEO.

“I am grateful for the opportunity to have led Wells Fargo,” he said in the same press release. “I am also very optimistic about its future, because of our talented and caring team members and the goodwill the stagecoach continues to enjoy with tens of millions of customers. While I have been deeply committed and focused on managing the Company through this period, I have decided it is best for the Company that I step aside.”

Remember, it’s always a good idea in general to monitor your credit report for any unauthorized accounts in your name. You can pull your credit reports for free each year at AnnualCreditReport.com and view two of your credit scores, updated every 14 days, for free on Credit.com.

Image: YouTube/Credit.com

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Your Credit Card Can Keep You From Getting Ripped Off. Here’s How

Purchase-Protection

When most people think of the value that credit cards offer, they first think of its power as a method of payment, and the ability to earn rewards. But some of the most valuable features of your credit card are its purchase protection policies. These policies can protect you, for instance, when your shiny new phone gets stolen, that camera you bought online arrives broken or your computer breaks just outside its warranty. Unfortunately, most cardholders are only vaguely aware of the their card’s purchase protection policies, and how to best use them.

Here are six ways that you can get the most value from your card’s purchase protection benefits.

1. Obtain a Copy of Your Card’s Guide to Benefits 

Every card issuer offers customers a document called the guide to benefits that details all of the purchase protection programs your card offers. It will include the types of purchase protection, the terms and conditions of each, and how to submit a claim. You would have received a copy of this document in the mail with your credit card after you opened your account, but few people actually save it. Instead, you can search for an electronic version online or contact your card issuer to request a new one by mail.

2. Save Your Receipts 

There are several kinds of purchase protection benefits that may be offered by your credit card including damage and theft protection, price protection, extended warranty coverage and return guarantees. But what all of these policies have in common is the need to provide your original purchase receipt when submitting a claim. To keep track of your  receipts, you could place them all in a file, or you could put them in an envelope that you keep attached the purchase itself. Another reliable strategy is to take a picture of the receipt with your smartphone, as long as its memory is backed up online.

3. Chose a Credit Card Based on Its Purchase Protection Policies

When selecting a new credit card, take a moment to consider its benefits, including purchase protection. While many cards come with a policy that compensates you for theft or damage, some credit cards come with additional policies, like extended warranty coverage, a return guarantee and/or price protection.

And if you have several credit cards, you might want to choose a card to make a purchase based on its protections. For example, if you’re purchasing an expensive electronic item, you might want to choose a card that offers the longest extended warranty option.

Remember, the better your credit, the more likely you’ll qualify for credit cards with these types of protections. It’s a good idea to check your credit before you apply for a card. (You can check out two of your credit scores, updated every 14 days, on Credit.com)

 

4. Look for Unusual Benefits

While many credit cards offer similar purchase protection policies, there are some cards that feature unusual exceptions that can be valuable. For example, eligible Wells Fargo’s credit cards come with a mobile phone protection policy that can reimburse you for up to $600 if your phone is stolen or damaged, so long as you pay for your cell phone bill with the card. Also, the Citi Prestige comes with Missed Event Ticket Protection that can cover the cost of your ticket to a sporting event or concert if an unexpected delay causes you to miss it. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)

5. Closely Follow the Terms of the Policy

Purchase protection policies will require you to take several steps in order to submit a valid claim. For example, if an item is stolen, you will have to make a police report within a specified time, typically 48 hours. If purchase is damaged, then you might have to obtain repair estimates as part of the claims process. Finally, you will always have to fill out a claims form within a designated time period, typically within 30-90 days of a loss.

6. Rely on Your Credit Card’s Extended Warranty Coverage Instead of Optional Plans

When you make a major purchase from a retailer, it will often offer you an optional extended warranty at an additional price. But if you are aware of your credit card’s policy, then you may be able to enjoy much of the same coverage at no additional cost.

At publishing time, the Citi Prestige Card  is offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for the card. However, this relationship does not result in any preferential editorial treatment.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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Wells Fargo Execs to Give Back Some of Their Millions Following Fake Account Scandal

Wells-Fargo-execs

The Wells Fargo sales scandal will cost chairman and chief executive John Stumpf $41 million and former community banking supervisor Carrie Tolstedt $19 million, as per a decision made by the bank’s board announced on Tuesday. The money will come from the executives’ unvested equity awards through a clawback process.

For Stumpf, the $41 million is about 25% of the compensation he received during his 35 years at the bank, the Wall Street Journal said; he earned a total compensation of $19.3 million in 2015, according to an Equilar data analysis. Stumpf will also forego his salary during an independent internal investigation mandated by the bank’s board. He will not receive a bonus for 2016.

Carrie Tolstedt, who was head of community banking, has left the company ahead of her planned December retirement and will forfeit all of her outstanding unvested equity awards, valued at approximately $19 million, based on Tuesday’s closing share price. She also won’t receive a bonus for 2016 or be paid severance or receive any retirement enhancements in connection with her separation from the company, according to a statement from Wells Fargo. “She has also agreed that she will not exercise her outstanding options during the pendency of the investigation,” according to the statement.

Wells Fargo faced a $185 million penalty fine by the Consumer Financial Protection Bureau and a thrashing by the U.S. Senate Committee on Banking earlier this month over some two million accounts that were opened using fictitious or unauthorized information without customers’ consent. The actions were the result of a cross-selling incentive that gave employees bonuses if they met quotas. Former employees have claimed they were fired or demoted for not meeting the impossible quotas set by the bank, and have filed a $2.6 billion class action lawsuit. The bank fired 5,300 employees over the fraud but took no action against the supervising executives, which drew further criticism from the Senate Committee last week.

In Stumpf’s prepared testimony to the Senate, he said he was “deeply sorry” and takes full responsibility for “all unethical sales practices in our retail banking business, and I am fully committed to doing everything possible to fix this issue.” He said the fraudulent accounts were not done through an orchestrated effort by the company and employees were never directed to provide products and services that customers did not want or need.

The Independent Directors of the Board of Directors of Wells Fargo & Company have launched an independent investigation into the company’s retail banking sales practices and related matters, and a special committee of independent directors will lead the investigation, working with the board’s Human Resources committee and independent counsel. Stumpf has recused himself from all matters related to the Independent Directors’ investigation and deliberations.

“We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the Company’s business are conducted with integrity, transparency, and oversight,” Stephen Sanger, lead independent director, said in a press release. He noted, the bank may take other employee related actions “so there can be no repetition of similar conduct.”

This moment in history may produce repercussions: Earlier this month, regulators proposed tighter restrictions on how Wall Street bankers are paid.

Wells Fargo had not responded to requests for follow-up comment by press time.

Remember, it’s always a good idea in general to monitor your credit report for any unauthorized accounts in your name. You can pull your credit reports for free each year at AnnualCreditReport.com and get a free snapshot of your credit report, updated every two weeks, at Credit.com.

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How the Wells Fargo Scandal Could Impact Your Credit Score

Wells Fargo Bank

Since 2011, roughly 2.1 million accounts were opened by Wells Fargo Bank for existing bank customers who didn’t actually intend to apply for them on their own. While some legislators are calling for the company’s CEO John Stumpf to resign, the damage for many Wells Fargo customers impacted by the fraud has already been done. In some cases, customers have seen their credit scores damaged.

If you’re a Wells Fargo customer, you probably have just one question:

What should I do if I’m one of the bank’s customers who ended up with accounts for which I never applied and what’s best for my credit scores?

 

We’ve got you covered.

The fake accounts opened by Wells Fargo employees fell into four separate buckets of account types, according to the Consumer Financial Protection Bureau. Three of those four account types could result in some sort of credit score reduction: Deposit accounts (checking, saving); Credit card accounts; debit card accounts.

Credit Card Accounts

According to the CFPB, Wells Fargo submitted roughly 565,443 credit card applications that “may not have been authorized.” The application likely resulted in a credit report being pulled and a credit inquiry occurring, which as I explained above can cause a score to go down, albeit a minor decrease and in some cases has long since been removed. The more meaningful issue regarding credit cards is what to do with the open credit card account that is almost guaranteed to be on your three credit reports.

The impact of the credit card account can fall into one of three categories as it pertains to your credit scores; positive, negative or neutral.

Positive impact: If the account has no balance and a large credit limit then it’s very likely helping your credit scores because of the positive influence it’s having on your credit card balance-to-limit ratios. If this is the case then leaving the account open, assuming you actually don’t mind having it, may be the best course of action especially if you’re about to go out and apply for some sort of credit and need the best credit scores possible.

Negative impact: If the credit card account is relatively new then it may be lowering your scores because it is lowering the average age of the accounts on your reports. Closing the account isn’t going to change that because closed accounts still have a “date opened” and a young closed account is considered the same way that a young but open account is considered. If this is causing too much of a score problem then asking that it be removed may be your best bet. The deletion will back out any impact on your scores.

Neutral impact: If the credit card is unremarkable then it is likely not having any measurable impact on your credit scores. So, no huge credit limit helping your balance-to-limit ratios and the age of the account isn’t helping or hurting your scores.

In that case you can either live with the account and leave it open or you can close it or perhaps even ask that it be removed.

Deposit Accounts and Debit Card Accounts

According to the CFPB Wells Fargo opened roughly 1.53 million deposit accounts and an undisclosed number of debit card accounts that may not have been authorized by the customer. Deposit accounts generally include checking, savings and money market accounts…any place where you can make a deposit. Deposit accounts and debit cards are never ever reported to the credit reporting agencies so if one was opened in your name it’s not on your credit reports.

However, if the bank pulled a credit report prior to opening the deposit account or issuing the debit card (not unheard of) then there could be a credit inquiry on your report that you didn’t instigate. If that happened then there’s a chance your credit score went down as a result. Having said that, the inquiry would fall into one of these 3 categories and would be considered accordingly…

  • If the inquiry is over 24 months old then it has already been deleted by the credit bureau/s and is no longer being considered by any credit scoring systems.
  • If it is between 12-23 months old then it is still on your credit report/s, but is not being considered by any credit scoring systems.
  • If it is under 12 months old then it is being seen and could result in a lower credit score on that one credit report. If possible, I’d ask that any unauthorized inquiries be removed because they have no redeeming value. Point being, inquiries never help your scores.

While it was not mentioned in the CFPB’s Consent Order, in many scenarios overdraft protection on checking accounts is reported to the credit reporting agencies as an unused installment loan, normally with a line of no more than a few hundred dollars.

If that did, in fact, occur with these Wells Fargo checking accounts then the installment loan could result in a lower score but only if that loan is significantly lowering the average age of the accounts on your credit reports. The age of your credit history factors into your credit score. If it’s too low, it could drag your score down.

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Wells Fargo’s Fake Account Scandal: CEO Vows to ‘Make it Right’ but Doesn’t Explain How

wells-fargo-unauthorized-accounts

A group of senators just spent about an hour and a half grilling John Stumpf, the CEO and chairman of Wells Fargo, about 2 million unauthorized accounts that were opened under his watch and how Wells Fargo was going to make it up to customers. Stumpf’s answers to many of those questions was some variation of, “We’re working on it” and “Let me get back to you on that.”

It’s perhaps unsurprising that the members of the Senate Banking Committee appeared unsatisfied with the answers.

A quick recap: Wells Fargo was fined $185 million by the Consumer Financial Protection Bureau in early September for opening about 2 million unauthorized credit card and deposit accounts. Wells Fargo previously implemented (and touted the results of) ambitious cross-selling goals, in which a banker gets an existing customer to open additional Wells Fargo accounts. The bank incentivized cross-selling with bonuses. Those who didn’t meet sales goals were written up and could ultimately lose their jobs. About 5,300 employees were fired for opening accounts and moving consumers’ money to them without the knowledge or consent of the customers. That happened between 2011 and 2015 — in 2013, now-retired reporter E. Scott Reckard wrote about it for the Los Angeles Times, giving the practices national exposure.

Now, in 2016, Stumpf testified that Wells Fargo has just begun the process of making affected consumers whole, including refunding customers who were charged fees on unauthorized accounts and confirming with customers that the open accounts in their names are in fact products the consumers want. Wells Fargo will also extend the investigation to see if the practices occurred in 2009 and 2010 (thus far, the probe has gone back only to 2011).

The Far Reach of Damaged Credit

But there’s a lot more to making up for what happened, many of the senators pointed out. Sen. Jon Tester, D-Mont., said that opening a new account can affect a consumer’s credit (true for credit accounts, not for deposit accounts), and he asked Stumpf if Wells Fargo would re-establish the credit of all the people whose credit scores were hit by these new accounts.

Stumpf: “I’ve told our people to go back and make it right.”

Sen. Mike Crapo, R-Idaho, followed up: “How do you do that?” Stumpf’s answer: “That is a very good question. We’re just starting that process. I don’t have enough to give you right now.”

It’ll likely be complicated. Tester gave the example of someone whose credit score was hurt by Wells Fargo’s fraud and then applied for a mortgage with another bank — if that person qualified for a higher mortgage rate because of the credit score damage, how would Wells Fargo make up for the extra interest on that mortgage? Sen. Joe Donnelly, D-Ind., demanded a specific answer on that: “Will you pay back every extra dime that these people are going to pay over 30 years?” Stumpf said, “We’ve been thinking about that.”

It can get even messier. Sen. Chuck Schumer, D-N.Y., gave the hypothetical example of someone who was charged a fee on an unauthorized account, causing them to bounce their car payment check and end up with a negative event on their credit report. Unpaid fees on a non-credit account can be sent to a debt collector, and collection accounts can seriously damage your credit standing. Untangling the mess could be quite difficult.

Much of the questioning revolved around three core issues:

  • How long Stumpf or other executives knew the incentive program was a problem? (Stumpf said it came to his attention in 2013.)
  • Why didn’t Wells Fargo disclose the “dark side” of cross-selling incentives when it reported on its successes? (Stumpf didn’t think “it was material.”)
  • Why wasn’t the executive who oversaw the retail banking operation, Carrie Tolstedt, fired? (Stumpf told Sen. Elizabeth Warren, D-Mass., he never considered it.)

Perhaps the most common theme of the interrogation: Calls for Stumpf’s resignation, in addition to executives (including Tolstedt) giving back pay they earned while this was going on.

“You should be criminally investigated by both the Department of Justice and the [Securities & Exchange] Commission,” Warren said. “The only way Wall Street will change is if executives face jail time when they preside over massive frauds,”

Stumpf, for his part, said he disagreed that it was a massive fraud. He apologized repeatedly throughout his testimony and said he will honor and respect any decision the board makes regarding his employment and compensation.

Looking Out for Yourself

Unauthorized financial activity is a real threat to your credit standing, which is one of many reasons to closely and regularly review your credit reports for accuracy. You can keep an eye out for unfamiliar accounts by pulling your credit reports for free each year at AnnualCreditReport.com. You can also get a free credit report summary every 14 days on Credit.com to help put a stop to unnecessary damage. If you see something that doesn’t look right, be sure to contact that creditor and dispute the information with the major credit reporting agencies (you can go here to learn how.)

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Wells Fargo Fined $185 Million Over Fake Credit Card & Deposit Accounts

wellsfargo

Thousands of Wells Fargo bank employees seeking sales bonuses participated in a scheme that led to the opening of roughly 2 million unauthorized accounts, federal regulators said Thursday. For failing to monitor an incentive program that spun out of control, leading to “widespread” abuse of consumers’ information, Well Fargo must now pay the biggest-ever penalty levied by the Consumer Financial Protection Bureau (CFPB), the agency said.

At the root of the scheme was a program that gave bonuses to employees who convinced existing customers to give more of their business to Wells Fargo — cross-selling checking account customers on new credit cards, for example.

But back in 2011, Wells employees started opening accounts for consumers — and moving account-holders’ money into them — without their consent or knowledge.

“Thousands of bank employees found ways to game the system by secretly signing up existing clients for new services that were never requested,” CFPB Director Richard Cordray said. “They misused consumer names and personal information to create new checking and credit card accounts to inflate their sales figures to meet their sales targets and claim higher bonuses. Money that belonged to customers was used and moved around without their consent, and in some instances these activities generated new fees and costs.”

Wells workers went so far as to create email addresses that did not belong to their customers and use those new addresses to enroll people in unwanted online-banking services, the CFPB said.

According an analysis conducted by Wells, employees opened roughly 1.5 million deposit accounts, and another roughly 565,000 credit cards, that may not have been authorized by consumers, the CFPB said. Some consumers ended up paying overdraft fees, or facing other financial penalties, because of the unauthorized activity.

Wells has been ordered to pay a $100 million civil penalty, and to refund harmed consumers. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.

“Unchecked incentives can lead to serious consumer harm, and that is what happened here,” Cordray said. “Today’s action should serve notice to the entire industry. If the incentive compensation schemes or sales targets are implemented in ways that threaten harm to consumers and lead to violations of the law, then banks and other financial companies will be held accountable.”

In a statement, the bank said it had terminated managers and team members “who acted counter to our values.”

“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us,” the statement read. “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

John Stumpf, CEO of Wells Fargo, also sent an email to employees today, which the firm made public.

“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today’s agreements are consistent with these beliefs,” the email read. It told employees to report ethics violations on an anonymous “EthicsLine,” or to their managers or Human Resources adviser.

“As difficult as today’s news is, this is an opportunity to recommit ourselves to our customers, doing all that we can to put their interests first,” Stumpf wrote.

Customers can keep an eye out for unauthorized credit accounts by regularly checking their credit. You can so by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your free credit report summary, updated every 14 days, on Credit.com.

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Wells Fargo, Amazon Nix Their Private Student Loan Deal

private-student-loans

Wells Fargo and Amazon appear to have ended their private student loan partnership.

Just six weeks after announcing that Amazon Prime members were eligible for interest rate discounts on the bank’s private student loan products, traces of the deal were removed from the online retailer’s student-centric site. Wells’ previously Amazon-focused landing page also now redirects to the bank’s generic private student loan landing page.

A spokesperson for Wells Fargo confirmed via an email to Credit.com that the promotion had ended but did not respond to request for comment as to why. Amazon similarly confirmed the promotion had ended via an email without giving a reason why.

The promotion, announced July 21, offered Prime members and their co-signers a potential 0.50% base interest rate discount on all Wells Fargo private student loan products. They were also eligible for a 0.25% interest rate reduction if they enrolled in Wells Fargo’s automatic monthly loan repayment plan.

The bank’s website currently lists the the variable interest rates on its private student loans as ranging from 3.39% to 9.03%. Its fixed interest rates range from 5.94% to 10.93%.

The promotion’s end comes on the heels of Wells’ agreement to pay a $3.6 million civil penalty to the Consumer Financial Protection Bureau to settle allegations of illegal student loan servicing practices. (The bank declined to answer questions as to whether the two were directly related.)

Private Student Loans 101

Given the climbing cost of a college education, many students may be thinking of taking on a private student loan to cover their tuition. But it’s important to do your research before applying because these loans typically tout variable interest rates that, unlike the fixed rate associated with federal student loans, can fluctuate with market conditions. They also have fewer borrower protections than federal loans. (For instance, private student lenders are not required to offer forbearance or deferment options.) And, particularly if your credit is not in tip-top shape, the interest rate on these loans can climb quite high. (You can view two of your credit scores for free each month on Credit.com.)

If you do decide to take on a private student loan, be sure to read the terms and conditions carefully to find the best financing for you. Repayment plans tend to vary by lender, and some charge fees to process forbearance and deferment requests. You can learn more about what to watch out for when applying for private student loans here.

Image: BraunS

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