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“Do I have to go thru Card Member Services and pay them a fee to get my interest rate reduced on my credit cards? They want to charge $695,” a reader with the username “twenty45” wrote in a comment on our blog. “Is that a good business decision?”
That’s an excellent way to frame the question, actually. We all need to think of our finances and our credit as if they are our own small businesses. And in this case the answer is simple: No. This is a terrible business decision.
Why? Because this is a scam. Real credit card issuers and networks never offer to lower customers’ long-term interest rate in exchange for an upfront fee, says Gerri Detweiler, Credit.com’s personal finance expert.
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Potential victims are told they must call a separate number to talk to a live “operator.” This person offers to negotiate with the consumer’s credit card issuer for a lower interest rate in return for an upfront fee, usually between $700 and $1,000.
Sometimes the scammers actually do call the issuers and ask for the rate to be lowered. If they do, this is the beginning and end of the supposed “negotiation.”
Here’s the trick: Consumers can do the exact same thing, for free. If you make a good case, such as the years of loyalty you’ve shown your issuer or the fact that you’re receiving offers from many other issuers for cards with far lower rates, you might even win a lower rate yourself.
[Related Article: Despite Attention, Payday Scammers Keep Calling]
“Consumers are fully capable of talking to credit card companies on their own, for free, and getting similar results,” says Steve Cox, a Better Business Bureau spokesman. “Consumers simply don’t need to pay any company a thousand dollars to negotiate lower rates on their behalf.”
Here are some tips from the BBB on how to handle this situation:
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Image: Trace Meek, via Flickr
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