Lower Interest Rate Deals

A few weeks ago, my wife inquired about a lower interest rate on her only credit card with a large bank in America. Her goal was to possibly reduce the current interest rate on the card, which was at much higher rate than the average national credit card interest rate. The overall objective was to reduce her interest liability for as long as she could on the existing credit card balance without having to apply for a new card with a lower interest rate. During her call and discussions with the bank representative, she was told that no lower interest rate could be offered for her existing credit card both for the current loan balance and for any balance transfers. However, she was advised to apply for a new credit card that offers a no interest balance transfer. After a few days of brainstorming and discussions with me and following an analysis of identity fraud risks, we decided that we were willing to accept the additional identity fraud risks of having one more credit card in exchange for the benefits of a lower interest rate on the transferred balance to this new credit card.

Upon receipt of the new credit card, she called the bank to make the balance transfer as previously instructed by the bank. To her surprise, the bank told her that she could only make a no interest balance transfer from another bank’s credit card. The first bank representative did not tell her about this little piece of information when she first inquired about the possibility of a lower interest rate. Therefore, either the bank lied to her or the two bank representatives were not properly trained, consistent and knowledgeable enough when discussing bank products and solutions with her as a consumer. Either way, the bank misled a consumer whether knowingly or unknowingly, and, since the consumer inquiry and bank solutions were discussed on the phone, there was no fine print that the bank or us could refer back to.

Lessons learned

1. Don’t assume that any low interest rate balance transfer deal includes transfers in between credit cards from the same bank. Ask the bank specifically if the card you plan to transfer from is eligible for the lower interest rate deal. Even then, the answer you get may not be true as evidenced in our case but at least you try your best. In our case, my wife had asked the specific question about the eligibility of the card she wanted to transfer the balance from to the new card and take advantage of the lower interest rate balance transfer, and the answer she was given was absolutely positive. But, when she received the new card and called back to make the transfer, another bank representative provided a completely different answer, which changed the whole deal. As I stated, the answer was you could make any balance transfer for a zero interest rate, as long as the balance transfer is not from a credit card issued by the same bank. She did not want to transfer from another credit card, as she has no other credit card balances to transfer from, and the only card that she wanted to transfer balances from happened to be from the same bank.

2. Don’t activate the card until the transfer is completed if you plan to use the card. This is to ensure that if the suggested and initial lower interest rate deal is not what you agreed to, you can always decide not to activate and use the new credit card while reducing your risk of identity fraud by not increasing the number of active credit cards.

3. Don’t activate the card if you don’t plan to use the card. You may still decide to just take advantage of a lower interest rate balance transfer deal but not use the card for future transactions. This is specially a very good idea if you want to avoid having increased risk of unauthorized charges by owning too many credit cards.

4. Close your credit card immediately if you are not satisfied with the terms and conditions that were initially offered to you.

5. Get all the terms and agreements in writing before applying for the new low interest rate credit card.

To conclude, always make sure you do your best to understand the details behind any low interest rate deal. Unfortunately, you have to ask all the right questions and always request written evidence of your agreement and understanding of the answers that are provided to you. Not only verbal agreements have little value, but also a new customer service rep picks up the phone every time you contact the bank. Although, bank reps are required to enter the summary of their phone conversations with the bank customers in their systems, customers have no assurance of nor do they approve the summary entered into the system to ensure the summary fully and accurately reflects the phone conversations and agreements. Therefore, it is extremely important to not blindly trust the banks and their customer service reps and request that all lower interest rate agreements and understandings to be in writing.

Return from lower interest rate to other credit card fraud risks.

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