Credit Card Interest Rate Scam

The average annual percentage rate (APR) on interest-bearing credit card accounts was 16.4 percent in November 2021, according to Federal Reserve data, up more than 3 points from a decade earlier. Little wonder there’s a booming market for scammers peddling phony promises to reduce your credit card rates, slash interest payments and help you pay down big balances.

These interest-rate scams long have been a robocall staple. Credit cards were the third-most common subject of phone spam in 2021 (behind Social Security and auto warranties), according to Hiya, a company that provides cloud-based call-management services for businesses.

If you pick up, automated messengers claiming to be from banks or credit card companies urge you to “press 1” for a special, act-now offer to switch your account to low or even no interest. If you bite, a live operator takes over, pumping you for card numbers and other data they can use for identity theft.

Other callers say they’re from debt-relief companies with insider know-how in negotiating lower rates with card providers. They’ll charge hefty fees — one Florida operation shut down by federal regulators in February 2022 was charging customers as much as $4,995 up front, according to the Federal Trade Commission (FTC) — for things you can do yourself, like transfer your balance to a lower-rate card or sign you up for a new card with a limited-time 0 percent APR.

And they may neglect to tell you these moves can mean hefty bank or transaction fees.

The FTC has busted several such robocall schemes in recent years, one of which the agency says particularly targeted older adults. Even consumers who turned down suspicious rate-reduction pitches often learned later that the companies had used their information to apply for multiple credit cards.

“You have just as much clout with your credit card issuer as these [debt-relief] companies," the FTC says. If you want to try to lower your interest rate, call the customer-service number on the back of your credit card and ask.

Warning Signs

• You receive an automated call from “card services” or a major credit card company offering to reduce or eliminate your interest rate.
• You get an unsolicited call from a company promising to secure you a reduced APR and lower credit card interest payments.
• The company demands an upfront fee to negotiate with your card provider. It’s against the law for debt-relief services to collect payment before they have done anything for you.
• You’re pressed to act fast to take advantage of an offer or promotion that’s about to expire.