Finance Globe

U.S. financial and economic topics from several finance writers.
3 minutes reading time (523 words)

Credit Card Interest Rate Reduction Scam

Consumers should be very skeptical about offers from companies who claim they can reduce credit card interest rates, the Federal Trade Commission (FTC) warned on Friday.

The FTC, the nation's consumer protection agency, said that consumers are being flooded with robocalls - automated sales calls - from companies who offer to negotiate a lower interest rate. Of course, these companies charge a fee for their "services" but the FTC said that many of these claims are fraudulent.

The pitch to get you a lower interest rate may be nothing more than an identity thief's attempt to get personal data from you. Once a crook has your credit card numbers, your social security number, bank account numbers, and other personal identifying information, they have all they need to commit other forms of fraud against you. They can make charges to your current accounts and open new credit accounts in your name, or commit identity theft for government benefits, to get a job, or get medical care.

Never give your personal information to anyone who you didn't initiate contact with. Crooks are good at what they do - scamming unsuspecting people. They often have a very well-thought out pitch that sounds very believable, and they typically offer a deal that's almost too good to be true.

The credit card interest rate reduction scammers are no different. They claim to have a "special relationship" with card issuers, and claim to be able to save the card holder "thousands of dollars" in finance charges, allowing a cardholder to pay off their debt "three to five times faster" and may even go so far as to offer a money-back guarantee.

Even if the company follows through and actually negotiates with the card issuer, the interest savings are often far from what the negotiator promised, and consumers end up struggling to get their money refunded to them.

Also, the law has recently changed to forbid automated sales calls to consumers unless the consumer gives written permission to receive these calls, so getting an unsolicited automated call should be another red flag for a scam. The robocall rule applies even to businesses you already have a relationship with.

The rule does not apply to automated calls that are strictly for giving the consumer information. Examples of the types of calls not restricted by the rule include a prerecorded call for a doctor appointment reminder or an automated message from your child's school that buses are delayed.

But even if the interest rate reduction company does plan to follow through by getting your interest rate lowered, there really is nothing these negotiators can do that you can't do yourself for free. If you've handled your accounts responsibly, just give your card issuer a call to see if you can get a better rate. It's as simple as that.

Sometimes the card issuer will lower your rate, and sometimes they won't. But the reasons they do or don't are strictly based on if they think lowering your rate is a good business decision for them - not because they were asked by a company with a "special relationship."

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Sunday, 05 February 2023

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