A lot of consumers are careful about the credit card scams and the companies targeting people with services that essentially offer no help but cost a ridiculous fee. There are the debt relief providers, the credit score boosting services, and credit history erasers that have all been proven to be less than reputable. Consumers are getting more savvy about asking questions or avoiding these target marketing tactics altogether.
However, there are other scams involving credit cards that tend to fly under the radar and for consumers not thoroughly informed of what is out there, they are at higher risk of getting involved in the trappings of more complicated credit card-related scams.
Case in point – interest rate reduction scams.
Companies promoting interest rate reduction services often promote their ability to deal with your creditors in an effort to get your interest rate lowered on existing credit card accounts. The selling point of this service is that by reducing the interest rates on credit cards, consumers can save hundreds to thousands of dollars in finance charges over time. Another sales point is that by reducing the interest rate on credit cards, debt elimination can be achieved way faster than if consumers did not get a lowered rate.
The companies promoting these services often guarantee their services and push their long-standing relationships with credit card companies as their chief asset. Companies will often present their services as something only a ‘professional’ can attempt successfully. They will usually charge an upfront fee for services, even before a single service has been done.
Consumer Realities
While it is true that a lowered interest rates on credit cards do save money and make it possible for debt to paid off at a faster rate, the entire scenario should be a giant red flag for scam-conscious consumers.
Let’s take a look at the glaring signs of the interest rate reduction scam:
#1 Professionals Are Not Necessary
Companies that offer interest rate reduction services often insinuate that only they can make the reduction happen. This is a big myth that often leads consumers into forking over cash for no reason. Consumers have the right and the power to request a reduction in interest rate directly from their credit card provider. As long as a consumer is in good standing with their credit card account and make every effort to be a responsible card holder, a reasonable request for an interest rate may very well be considered. A consumer only needs to make direct contact with the creditor and make the request, either in writing or over the phone with a company manager.
#2 Service Guarantees is a Crock
Companies are guaranteeing results going so far as to offer money-back guarantees for success in lowering interest rates. However, regardless of who is doing the reduction requesting, there is never a guarantee the request will be granted. This is especially true now that credit card issuers are scrambling to make profits in light of the recent CARD Act regulations. As for that money-back guarantee, sure the offer may be on the table but the consumers who actually manage to pursue the guarantee and get their money back are few and far between. Many companies end up disappearing after just a short period of time which is not unusual for businesses not working on the up and up.
#3 Upfront Fees Are a Bad Sign
Any business that asks for an upfront amount of money before they do an ounce of business should be perceived as suspicious. No reputable company would expect payment for services not rendered. When it comes to credit card and debt related services that are likely to be a scam, the upfront fees are likely significant and those facing debts should find better things to do with their money.
#4 Skeptical Creditor Relations
No one should have a better relationship with their creditor than the consumer. If you pay your bills on time, stay loyal to your card provider, and do not extend your credit limits, you likely can have a lot of say when it comes to matters you’d like to see changed. Just because a company says they are tight with your creditors certainly does not mean you have to believe the claim. There is no one that should control your finances or financial information except you.
Interest reduction services likely advertise aggressively over the phone and through mail solicitations. Your best bet it to ignore the offers and file them immediately in the trash. Continue to be wary of promotions that ‘guarantee’ results or that promise ‘hassle-free’ services. Know that as a consumer you have an obligation to protect your information and to report any annoying solicitations you didn’t ask for. The Federal Trade Commission offers assistance with credit card related scams, including interest rate reduction services. Consumers can contact the FTC to file complaints by calling toll free 877-FTC-HELP.
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