Is Wells Fargo's Credit Card Division Customer Friendly or Incompetent?

by Odysseas Papadimitriou on October 20, 2009

wells-fargo-credit-cardsCertain economic factors, like unemployment and credit card default rates are intertwined.  So it’s absolutely natural that in an economic climate where experts are predicting a ten plus percent unemployment rate before the end of the year, credit card companies will have to change the way they do business in order to remain safe and profitable.  As we all know, most issuers have been doing this by raising interest rates on both new and existing customers.

Wells Fargo has recently joined its peers in announcing that it too will raise the rates on the credit cards it offers.  According to Kevin Rhein, group head of card services at Wells Fargo, “this is something we’ve been contemplating for quite a period of time… We had just reached the point that we don’t think we can offer credit cards at the current pricing and keep credit flowing.”  Rhein’s announcement is interesting because it seems to suggest that Wells Fargo waited as long as it could before instituting these new rates.  He states that the impetus for this change was the bank’s recognition that the flow of credit was actually in danger, which is another way of saying that the profitability of Wells Fargo’s credit card department was at risk.  This, and the fact that the rate hikes are not scheduled to go into effect until November 30, one day before Congress’ new suggested enactment date for the CARD Act, suggests that Wells Fargo really has waited until the last minute before raising rates.

Wells Fargo’s decision to remain hopeful in a rather bleak economic climate can be looked at in two different ways.  For the bank’s investors, the choice to wait until the last minute for rate hikes is unreasonable.  No other bank waited or is waiting now.  With the unemployment rate on the rise and federal law threatening to prohibit the rate hikes as early as December 1st, Wells Fargo’s banking peers increased their rates to insure the viability of their credit card businesses.  Wells Fargo chose not follow suit in the hopes that the economy would turn around — an assumption that was unsupported by the nation’s economic forecasters.  From an investor’s standpoint, Rhein’s assumptions were poor on this front — so much so, that we are worried about the general decision making abilities of Wells Fargo’s credit card services department and the bank in general.  What other bad assumptions are they operating under as they conduct business?

On the other hand, for Well Fargo’s customers, the choice to raise rates at the last minute is commendable.  In a period where the economy is making it more and more difficult to pay bills, Wells Fargo’s credit card customers are being allowed to pay off their balances at a lower rate for as long as Wells Fargo can afford it.  Wells Fargo’s decision shows that the lender potentially has more concern for its customers than it does for maintaining profitability.

In the end, it’s hard to determine how to view Wells Fargo’s credit card business practices.  All in all, only time will tell whether their policy turns out to be beneficial or disastrous and reflective of a card services department that’s been asleep at the wheel until forced into action by federal deadlines.


Jay Walker
I have had my fair share of credit cards in my day. But it's definitely not one size fits all. I will state the obvious and say do research. In this day in age there is no reason to not get all the facts in front of you with the internet as a valuable resource. For instance credit cards with rewards is a great site if you want to compare cards and see which is right for you. Happy Hunting!
May 9 at 15:54 pm
wells fargo financial is the worse credit card company to deal with,why would you screw your customers over?I just tore up my card with them,
and will never use wells fargo again,it's cash,cash,cash,from now on!
August 30 at 21:11 pm
I have been a customer of wells fargo credit card division for almost 30 years with excellent credit. They jacked up my interest rate to 16.65% and when you call customer service their remark was "Life isn't fair". I spoke to a Supervisor with their the same sentiment. I have had American Express for a little over a year, I called them and they reduced me with no question to 12%. I suggest all go to American Express, more professional, better rebate checks, and MORE CLASS!!!!
January 12 at 13:49 pm
Wells fargo reduces the Credit card customesr by rate hiking, changing the rate from fixed to adjustable with high starting rate, increases the reward points from 10k to 25k for redemption, they warned me it will affect my FICO score if I cancel it, who cares about FICO, I pay cash from now on, no more business with Wells fargo group, Cut the Wellsfargo credit card, don't call me Wells fargo financial, Wellsfargo insurance, wellsfargo mortgage, close account and leave Wellsfargo, bye, Fargo well
November 7 at 13:24 pm
Good ByeWF11/09
Upon receiving my notification of the APR hike I was flabbergasted and disappointed. I believe their decision will be detrimental as it will impact customer loyalty. I now look at their integrity or lack there of as a company as needing reevaluation. I will pay you off and leave you. So long WF
October 23 at 13:09 pm
Same here. I'm going to close my account and pay off my debt. And I agree, kick em in the balls.
October 30 at 17:56 pm
My credit union cc is lower apr than wf. Also, a loan is a hair higher than wf cc, so yes bye bye is right. I'm just trying to decide if I should go for the loan or cc. Lets see who wf is stuck with now. Per above, the flow they are counting on is not going to happen. They are burning the wrong people. Customer loyalty would have gone furtther .. marketing 101.
October 24 at 01:07 am
Wells Fargo as all other banks gets money from the fed for practically free. They are GARANTEED to make money by turining around and charging us the people who bailed their incompetance out %10 and higher apr. Kevin Reihn and his associates are nothing more than a financial gang. They have ruined our country. It is time we take it back. Kevin deserves a kick in the balls at the very least.
October 21 at 03:18 am
I could not agree more! Their customer service is the worst service I have experienced from any major bank.
October 21 at 10:10 am

Relevant Articles

Most Popular Topics

Most Popular Articles


Receive the latest advice and deals:

Wallet Hub Facebook Twitter Google Plus

Submit A Post

Want to be a guest blogger? Submit a Post