If you have a home equity line (HELOC) with Wells Fargo, at some point you will enter repayment; your LOC is no longer available for draw and you are obligated to meet a fixed min monthly payment (MMP) incorporating principal and interest at an agreed rate and term. Also, when a customer enters repayment, this presents an opportunity for WF to cynically rip off those customers for additional interest, an opportunity lustfully seized. It gets complicated, but I'll try to summarize.During the draw period, WF posts the monthly accrued interest which must be paid within ~23 days of billing. In repayment, WF does not post accumulated interest upon billing, choosing to post only the agreed MMP. Further WF unilaterally stipulates that a customer may not pay any of that MMP in advance of a bill being posted, although this stipulation is not disclosed in the HELOC Agreement.What’s the impact? Let’s say a customer’s MMP is $1500 and that for the following billing period this would break down into roughly $1000 principal and $500 interest. Further, the customer has $1000 in cash to apply to principal today. However, because the bill has not posted, the customer cannot allocate that $1000 to the upcoming billing cycle, i.e., if (s)he makes a payment of $1000 today, (s)he will still be required to make a full $1500 payment after a bill is posted. The result, of course, is interest accrues to the bank while the customer sits on the $1000 waiting for a bill to post. So, if I posit a scenario where payday is the last day of a month and the $1000 is budgeted on payday and billing is not until the 27th of the month, the customer winds up being systematically bilked for 28 days of interest against that $1000. I’ve run this scenario against my repayment obligation and have calculated that I stand to lose nearly $1000 to this systematic ripoff.Here are some other key facts concerning this ripoff:1. There is no systemic reason why principal must be bundled with interest in this billing scheme. The only real-world constraint is the calculation of monthly accumulated interest, but by bundling the bank constrains a customer’s debt repayment flexibility, much to the bank’s advantage.2. This billing “feature” is not disclosed in the HELOC agreement.3. Responding to complaints that the system is unfair and deceptive, and that the change in billing practices for customers in repayment is not disclosed, WF has chosen to obfuscate, evade and respond that their practice is “not unlawful.”If “not unlawful” is the standard to which the “rebranded” Wells Fargo aspires, it’s no wonder they are the most despised bank in the US.
