Don’t Be Scammed By Interest Reduction ServicesFebruary 11, 2011 - 8:53 am
One of the criteria for consumers choosing to apply for a credit card is the interest rate. If you have existing cards that have a higher than average interest rate, you may be tempted to fall for a company’s pitch that for a small fee they can reduce your interest rate. Unfortunately as the rule goes, what appears to be too good to be true usually is.
Understanding the Scam
There are a multitude of scams surrounding credit cards. The interest rate reduction scam involves companies or individuals that solicit their services to reduce the rate of existing card interest rates. The companies will claim they have a long-standing relationship with card providers. They claim that with lowered interest rates, consumers will end up saving thousands of dollars in interest rate charges. They also say that by reducing the interest rate, consumers will be able to eliminate credit card debt more effectively in a much faster period of time.
Some of the pitches will involved the use of buzz words like ‘limited time offer’ or ‘act now’ to lure in customers. Some even go so far as offering a cash-back guarantee on services. However, the reality of the scam is that the consumer will pay the fee, get no assistance, no reduced rates, and then when they try to collect on that money-back guarantee, they either can not contact the company or they spend a lot of effort trying to get their fee back. In many cases, the consumers lose out all around while the company falls off the map.
The interest rate reduction scam is just one of many that lure victims in with the promise of something that will not happen. By the time consumers pay the fee and learn the reality, it is too late and they are out of money.
Advice for Consumers
The agencies promoting the power to reduce credit card interest rates are being monitored by the Federal Trade Commission who caution consumers to avoid the lure of interest rate reduction services. They also offer advice to consumers who want a lowered interest rate – do the negotiations yourself.
Many service providers offer credit card services that can be done by the consumer for free, often with much more success. If you are interested in having a rate reduction on your credit cards, you can contact your credit card provider on your own and make the request. It costs nothing.
How to Make a Reduction Request
In order to make a legitimate request, you should ensure first that you are a good customers. If you make your payments on time, pay off your debts in full each month, and otherwise remain in good standing at all times with your credit card account, you may have a good chance of having your request granted. Contact your credit card company by phone and ask to speak to a supervisor or department manager who may be more likely to have the power to grant your request. Outline your good customer standing and your history of on-time payments to plead your case. Not all credit card providers will be willing to offer the rate reduction but there is no harm in making the request. In the worst case scenario, the credit card company will deny your request but if you can secure the reduction in interest, you will save money in finance charges.
If you are rejected in your offer, you still have the option of shopping for a new credit card. Only apply for a new credit card that meets your needs. Check out the interest rate, the card’s terms, and any incentive programs being offered before applying for a credit card. By carefully selecting the right card for you, you won’t negatively impact your credit score by applying for multiple cards at one time.
If you have been the victim of a credit card interest reduction scam, the FTC offers assistance if you file a complaint. You may contact them toll free at 877-FTC-HELP to report the scam. If you have been unfairly charged for such a service without your authorization, file a dispute with your credit card provider as soon as you discover the charge.