Have You Fallen For A Credit Card Interest Rate Reduction Scam?

Recording machines across the nation are being clogged with prerecorded phone calls from companies that claim to be able to negotiate significantly lower interest rates with your credit card issuers, if you just pay them a fee first. According to The Federal Trade Commission (FTC), the nation’s consumer protection agency, consumers who get these interest rate reduction robocalls should listen to them with extreme skepticism, and delete them. Many are scams.

The companies behind the sales pitches claim to have special relationships with credit card issuers. They guarantee that the reduced rates they offer will save you thousands of dollars in interest and finance charges, and will allow you to pay off your credit card debt three to five times faster. They claim that the lower interest rates are available for a limited time and that you need to act now. Some even use money-back guarantees as further enticement. (The FTC frowns heavily on guarantees)

According to the Federal Trade Commission, the companies behind these robocalls can’t do anything for you that you can’t do for yourself — for free. You have just as much clout with your credit card issuer as these companies, and you are just as likely to get turned down for a rate reduction regardless of their promises or supposed efforts to negotiate on your behalf.  FTC investigators found that people who pay for these services don’t get the touted interest rate reductions, don’t save the promised amounts, don’t pay off their credit card debt three to five times faster, and struggle to get refunds.

Amendments to the FTC’s Telemarketing Sales Rule prohibit companies, that sell relief services like these rate reduction scams on the phone, from charging a fee before they settle or reduce your debt. If you do business with a debt relief company, you may be required to put money in a dedicated bank account, which will be administered by an independent third party. The account administrator may charge you a reasonable fee, and is responsible for transferring funds from your account to pay your creditors and the debt settlement company when settlements occur.

Protect Yourself

Don’t give out your credit card information. Once a scammer has your data, they can charge purchases on your credit card or sell the information to other scammers.

Don’t share other personal financial or sensitive information, like your bank account or Social Security numbers. Scam artists often ask for this information during an unsolicited sales pitch, and then use it to commit other frauds against you.

Be skeptical of any unsolicited sales calls that are prerecorded.

If you’re looking to reduce the interest rate you’re paying on your credit card, your best bet is to handle it yourself for free. You can call the customer service phone number on the back of your credit card and ask for a reduced rate. Be calm, patient and persistent.  If you are tempted by the promises in a rate reduction robocall, hold off and hang up.

Credit Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

 

 

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