Scam Alert: Beware of Companies Promising to Reduce your Credit Card Interest Rates
If you receive a phone call from a company promising to lower your credit card’s interest rates, beware: the promises made may simply be full of hot air.
Solicitation from companies promising to lower consumers’ credit card interest rates has been on the rise from as far back as 2007, according to the Better Business Bureau. It certainly comes as no surprise that a host of unscrupulous companies would begin to come out of the woodwork as the recession took its hold throughout the country. However, what is surprising is how many consumers have fallen victim to it.
Does it mean that there are many consumers out there looking for relief – any relief – from their credit card debt? Or does it mean that these fraudulent companies are getting better and better at doing what they do best: fooling consumers and taking advantage of them at their weakest moments?
The answer is, unfortunately, probably yes to both of these questions.
Details of the Scam
The scam usually goes something like this: a credit card holder gets a phone solicitation from a company promising to lower the interest rates on their current credit cards, thereby saving them hundreds, if not thousands, of dollars in interest rate fees every year.
The company then asks for an upfront fee to do this – usually between $1,000 and $2,000. The problem starts when the company does nothing to lower the interest rate on the credit cards. Some companies simply do nothing after charging the fee, while others simply transfer the balance on the credit cards to another credit card with an equally high interest rate.
The scam is easy to pull off because the company asks for your credit card information upfront so that they can contact your credit card company to get the fees lowered. Of course, it goes without saying that this is something any credit card holder can do themselves.
What you can do
The best defense against fraudulent companies is to stay informed, stay educated and ask questions. If the company’s claims seem too good to be true, they probably are. Aside from accredited consumer counseling services, companies in general can not make claims to fix your credit or change the terms of your credit cards.
If you suspect fraud, immediately contact the Federal Trade Commission to report the incident.
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