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Don’t Fall Victim To An Interest Rate Reduction Scam

Nov. 20, 2013
Credit Card Basics, Credit Cards
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To save some cash, many people will do just about anything to reduce their credit card interest rates. Sadly, there are scammers looking to profit off this desperation.

There’s been a surge over the past couple of months in robocalls offering a phony interest rate reduction service to credit card customers, according to the Federal Trade Commission (FTC). A simple phone call might not seem like a big deal, but these scammers are cheating consumers out of their hard-earned money.

Some tips on how to recognize these scams, and avoid getting ripped off in case you get one of these calls:

What The Scammers Say

The FTC says the companies behind these automated calls, which are popping up in voice mailboxes across the country, are offering potential customers a service to reduce the interest rates on their credit cards. They claim:

  • They have special relationships with credit card issuers, which puts them in a position to persuade the banks to lower interest rates
  • They can save customers thousands of dollars in interest
  • They’ll lower interest rates so much that customers will be able to pay off their credit card debt 3-5 times faster
  • They’re offering their services for a limited time

All these statements should be taken with a grain of salt; while some legitimate companies offer similar services, many of the automated messages Americans are receiving are from scammers who will over-promise and under-deliver.

What The Scammers Mean

So what are these shady characters really after? Money, for starters. Most of them charge outrageous fees for negotiating with credit card companies on your behalf. They’re charging sky-high fees for something that most of us can do on our own.

Also, these scammers might be looking for personal information, so it’s important to protect yours (see below).

» MORE: How to Dispute Fraudulent Credit Card Charges

How To Stay Safe

If you get this kind of call, it’s important to guard your personal and financial information. This means taking a few simple steps:

  • Don’t give a caller you don’t recognize or trust any compromising information, such as your Social Security number or your address
  • Don’t give an unverified caller financial information, either; keep your checking and credit card account numbers private

How to help keep other consumers from being conned: Reporting scammers to the FTC can help them get prosecuted, so if you think you received a call from a sketchy interest-rate reduction company, call the FTC at 1-877-FTC-HELP or visit this site.

Looking To Reduce Your Interest Rate The Right Way?

One of the most annoying things of this scam: What they’re offering, you can do for free on your own. If you’re in debt, consider taking these steps:

  • Call your credit card company and ask for a lower rate. If your first request doesn’t work, ask to speak to a supervisor, then threaten to take your business elsewhere. This will likely get their attention.
  • Transfer your balance to a lower-interest rate card. If your credit is decent, you should be able to lower your interest rate by transferring your outstanding balance to a card with a lower rate.
  • Consolidate. If your credit card debt is spread among several cards, think about taking out a consolidation loan to roll all of your payments into one. Not only is this more convenient, but you should also be able to get a lower interest rate.

The takeaway: Interest rate reduction sales pitches might seem appealing, but many people offering these services have ulterior motives. Don’t fall victim to a scammer, and be sure to keep your personal information safe; after all, it might be your most valuable tool in getting your credit card interest rate reduced the right way.