>> after leaving belgian, secretary acosta would make additional stops in estonia and germany to visit a local leads and meet with u.s. and allied service members. today president biden speaks about the u.s. economy on the final day of the national association of counties, legislative conference in washington, d.c. watch live at 1 p.m. eastern on c-span, on c-span now our free mobile video at or online at c-span.org. >> c-span is your unfiltered view of government. we are funded by these television companies and more including comcast. >> are you thinking this is just a committed center? it's way more than that. >> comcast is partnering with 1000 community centers to create create wi-fi enabled lift zones so students from low income famines can get the tools they need to be ready for anything. >> comcast supports c-span is a public service along with these

other television providers giving you a front-row seat to democracy. >> a discussion of a credit card late fees with a latex with americans for financial reform serves as ali consumer policy council. thanks for joining us this morning. >> thank you for having me. >> tell us about your organization, what it does take a in the space of credit cards and things like that at how are you funded? >> american for financial reform is a nonpartisan, nonprofit made up of 200 organizations and we were formed in the wake of the 2008 crisis and we're working to lay the foundation for a stable and for equitable economy for all people. weta are funded by the grant and donors who feel like we're doing great and necessary work. >> before we go to specifically what the president said about credit card, talk about exactly what your organization sees, how the organizationn use them and

what issues you have with them. >> so the overall thing that we feel about credit card lee sees is we agree with the cfpb's proposed rule to make credit card m late fees more proportiol to what credit card issuers are actually putting out our spending to click on these late fees. we know, we think the president's speech was in line with how we feel about credit card late fees come on let's hear from the president from earlier this week thie of thehe union particularly talk about those credit card fees and here he ised from earlier. >> right now credit card companies charge an average of $31 whenever you can't pay your bill on time. that's on top of the interest you are already paying. now, nobody is saying that you should pay or you shouldn't pay your fees on time. and no one says the banks should lend you money for free. but that's what makes are

charging us for. but in the obama-biden administration congress passed the bipartisan law the said late feesot charge that are significantly more than the late payment cost them in the firstt place. and so while it doesn't cost 31 bucks for a bank to to process the late fee, but that's how much they're charging you now. and folks, that's a joke fee. if there ever was one. and they can drain hundreds of dollars a figure from the pockets of hard working americaf families especially, especially folks who are already struggling to make ends meet. >> host: the president from earlier this week. he talked about the consumer financial protection bureau, specifically their goals releaso what the they want to do foe fees. tell us specifically what they're looking to do. >> guest: so i'm going to take it back to the card act of 2009,

and the card act established in the president did mention that in his speech come was established to protect consumers from predatory credit card fees. and that is rising interest rates without disclosure or notice, excessive late fees and arbitrate the fluctuating due dates pixel and credit card act of '09 was passed, congress bi-partisanly past that bill. the federalpa reserve board went back in 2010 and created this immunity provision for card issuers and banks, saying that you can raise your late fees hereafter year under the guise of inflation, and so now we have $30 late fees for the first event and 41-dollar late fees for subsequent events, which is costing americans $12 billion a year. so the cfpb has proposed a rule to go back to the text on the

card act to say we want to make sure that late fees are reasonable and proportional in line with what is actually costing card issuers to cover these late fees and that's about an dollars fee, which is going to save americans $9 million a which is is about 75% savings on credit card late fees. >> host: if they if it a potential of 30 to $41, eight dollars as a cap, do you think that would encourage people to skip out on paying the fee knowing it's going, if you're going down from $41 it's one of the going toor be eight dollarsf you missgo a payment? >> guest: well, , the rhetoric is that late fees, the thing about late fees they're trying to encourage people to pay on time. but if, low income situation or subprime borrower and the banks know this when they choose to issue you credit, tacking on a late fee is insult to injury.

ifbl they know you're unable to pay, the credit you are using plus interest which is about 12s are paying interest on credit cards, plus a late fee, the banks though they're setting themselves up to do. >> host: the american bankers association weighed in on this proposal and this is what part of what theyaid.d. the extreme cfpb proposal harm consumersy reducing competition increasing cost of credit. will result in more look lower credit scores and constent with the encouragement of responsible credit managemt if the proposa is enacted critical issuers will be forced to adjust to new risk by reducing credit lines, tightening standards for new accounts and raising a pr is for all consumers including the millions who paypr on time. how would you respond to that? >> we've heard this before. we heard thisyo when congress passed the card act. the banking association and industry is going to say we're going to have to raise interest rates to take care of this. we're going to a stringent and

more particular about who has credit and buy with the cfpb what hurt the very people the kind of want to help by denying them access to credit? a study for years after, four years after the card act suggest that the industry and banks and card issuers that not raise interest rates. they did that becomera more stringent with giving access to credit, hence them a prank on subprime consumers. that study shows that the card act saved consumers $11.9 billion a year. so the cfpb's proposal has the same effect because it could save consumers $9 billion a year. the only thing the industry is what about us that have that extra cushion at thed end of te year to fatten their bottom line, our guess with us until 10:00 and the joint asker about this proposal from the cfpb and what president biden said about these things, for the eastern/central time zones,

202-748-8000. 202-748-8000. for the mountain/pacific time zones8- 202-748-8001. and if you want to text us, 202-748-8003. how are late fees typically calculated? i know you heard $30 and 41 but one but howpi does that calculation come about? >> guest: so right now with the credit card act, credit card late fees are adjusted for inflation as well as a credit card late fee can be 100% of what the minimum payment is. a lot of these numbers are kind of arbitrary and the immunity provision has given industry a lot of leeway. they don't even havend to prove that this inflation adjustment is coinciding with the cost that it actually costs them to do business regarding late fees. >> host: the cfpb according to its reporting in 2020 charge

$12 billion in late fee penalties. respond to that. >> guest: in 2019 it was 14 billion. so in 2020 it went down because of the stimulus packages that the president at the time issued, and so consumers were actually paying down their credit card debt. that was down from $14 billion. >> host: again the americans for financial reform elyse hicks joining us for this conversation. conversation. our first call comes from ruth in california. you're on with our guest. go ahead with your question or comment. >> caller: good morning. i'm glad you brought up the subject of bankers in the banking industry with relation to creditth cards. my credit cards is issued by my bank. my bank is also associated with

experience in which is one of those credit agencies -- xp region. this is this is a letter r credit and all that. they are constantly sending me even if they say you know, you could pay down your balance better with one of these credit cards with a balance transfer, daddy yada, yada. so i look at them and they do have a pretty good idea of the information that's in my bank account because they arenk associated witht my bank. so if i apply for these cards and and turned down, i'm not so upset about being turned down as

the prospect which is given a really good chance of getting, you know, quote-unquote, you know, this choice is chosen especially for you. but when we apply for a credit card, even if we don't get it, they have to do what is called a hard credit check, if that's the correct term, but the word heart is in their versus soft. >> host: thank you very much. ms. hicks go ahead. >> guest: what ruth is large part isn data privacy and with experian being hooked up with banks and things and they're sharing information, so that's a totally different issue entirely. but yes, when you do apply for a credit card orr is a hard inquiy on your account. what ruth is talking about data privacy, you know, we could get into on another call in another

day. >> host:ho this is a view of a tweeter who ask how much is average american pay in late fees compared to finance charges? >> guest: again, americans as a whole are spending $12 billion a year on credit card late fees, and about 42 million americans last year admitted to actually missing a payment. that could mean because of anything. auto pay wasn't set up, you silva forgot. it's not that people don't want to paint and also not because the cfpb wants to eliminate late fees altogether. it's a myriad of things. people are paying a lot, $12 billion in late fees. >> host: from that in pennsylvania, go ahead. >> caller: why do banks give people money back and take money from people?

they take money from people who pay late fees $30, and they get people back 1% 1%, 2% on credit card if you pay off on time. why with banks not extend the credit that people need instead of taking from one person in giving to another? >> guest: that's a great question.a normally, people with, we call them super prime consumers who have over 700 credit scores, are actually the ones getting those incentives because they are in a better place. when we are saying, talking about money back when you make purchases it because they are actually paying those off. they are not in the cycle of carrying a balance. so it seems like no income subprime and by pock commuters are caught in the cycle of not

being able to pay off the credit cards and being subject to the late fees, and again a lot of the smaller banks and credit unions who are in the card issuing gain kind of prey and want to do business with subprime consumers because they know from the outfit that they're not come to be able to pay the credit interest and tack on a late fee. they use that revenue which is a very substantial part of their bottom line, about 15%, to move the bank for the credit union along or to make money in that way. so it's not set up for those who cannot pay. but that's with the bulk of the money is being made. >> host: this is another viewer mark off twitter asking or making a statement, if critical and late fees are a limited they will charge the rest of us fees to make up for the lost fees. this will backfire and credit

card companies will no longer approve high-risk candidates and pass of the fees to those responsible credit card owners. >> guest: again, going back to the card act there was all this rhetoric before. it ended uprh saving consumers 1 $11 billion. this is just rhetoric that industry is pushing. they will not, probably not, most likely not raise interest rates. they didn't do it with the card act. they are probably notot going to do it now. they are not going to be more stringent on who gets access to credit because they are dependent on subprime borrowers and consumers to saddle the bulk of the pelvis and that they're making from other fees. and there are other fees. there are over the limit fees, convenient fees. we are just talk about credit card late fees. there's a married of other fees will not even talking about. >> host: is it possible to negotiate with the credit card company over late fees?

>> guest: it is possible, and i've done it. you know, it happens. i have done it and paid the bill for next day because i just forgot, and they waived the late fee. i'm not saying that card issuers and banks are totally against haggling on negotiating with the credit card late fees, but we're talking about a cycle of poverty when people are a just not ableo pay, and this is month after month after month and they dig themselves in a bigger hole. >> host: here is kevin in texas. you are on with our guest. good morning. >> caller: good morning, ms. hicks. >> guest: good morning. >> caller:di credit, i'm just an old country boy with common sense. but would you define credit this, it is a two equation problem. the ability to earn and the willingness to pay it back. is that a correct statement? >> guest: i can agree with

that. >> caller: okay. and what you're talking about is charity. charity starts at home, correct? >> guest: no. that's not what this means. >> caller: okay. well, i would say we learned it in the college students who did want to pay the loans. the government paid their luster we find out they have the willingness pay it back. so i, really it's just charity if i'm going to bail them out with my tax dollars. >> host: thanks, caller. ms. hicks, anythingg to that? >> guest: no. >> host: from samoa and north carolina.. roanoke. ms. hicks, could you tell me little bit about then as far as the cfpb's proposal, what status, hasn't already been put into place oro what's the timeline as far as where it is at? >> guest: so this is a notice

of proposed rulemaking. so the cfpb gestated that they're looking into this issue and they have framed a rule that says eight dollars is reasonable and proportional to a banks are paying, and they select to go through the process. they still have to listen to how this is going to affect industry. they sought to go to go through a comic period. we don't expect a final, final rule until maybepe next year. >> host: once they go to the common period they could enact a row with no steps after that come right? they could just putt? into plac? >> guest: i'm not att liberty to speak on whether cfpb can and cannot do, i don't work there. however, they normally go through through a time where they do listen to industry as well as consumer advocates just like me. and they are pretty fair and listen to both sides. i think they will put a lot of

time and effort into getting this right. >> host: if the rule does go forward, is open to legal challenges? >> guest: it will be, yes,, some old and north carolina, go ahead please. simone in roanoke rapids, hello. we will go to jerry, jerry is in texas. t jerry, good morning. go ahead, okay. just changing the name makes a big difference.e. organized crime is now big business. credit card interest used to be called loansharking. insurance -- [inaudible] >> host: jerry, go ahead. let's try simone again from north carolina. hello. all right. this is gary in kentucky. hello. >> caller: hello.

credit is based on your ability to pay back, and when you sign in for a credit card, you get a service agreement. you know the deal going in. you know the high charges that could be entailed on your bill if youul don't pay on time. so part of the consumer, if somebody is standing in for these people, it's part of the responsibility. if you make a late payment on your house they foreclose on you. i mean, this is just part of consumer, i don't know, overreach. >> host: that's gary in kentucky. >> guest: well, thanks for your comment. what we have seen is credit card companies are charging us five times more than it actually cost them to collect on these late payments. so again we're not saying that late payments should be totally eliminated. we are saying that credit cards

issuers and banks shouldn't be making money off the backs of people, and we're talking about 10% of the total assets going to jump fees and credit card late fees are junk fees. they should be making money off the backs of that if it cost they should pass on that cost to consumers just andhe on, and i'm saying that's not $30 and that's a $41. that's five times more than what it is actually costing them to click on a late fee. >> host: eastern and central time zone, 202-748-8000 and pacific in that time zones 202-748-8001. this is from robert in texas. he tax us think i support capping credit card late fees out of personal experience. the worst trouble with paying off my credit cards because of those fees and interest and then add cap the interest of the maximum dollarr value. >> guest: so cfpb doesn't have the power to set the use recap

for anything. however, yet credit card late fees, you know, a top of the interest which is about $120 billion a year, is again adding insult to injury, especially if it's not costing those banks that much to cover thatat payment. >> host: from philadelphia we will hear from rick. >> caller: hello. thank you for taking my call. all the comments have been extremely interesting. i just wantng to say one thing. these students take a loan because they have no ability to pay for college. they go to college, they become professionals and to contribute to our economy in many different ways. however, the banks set up these predatory systems of the payback period and i don't see the difference in giving some orre l of the student loans in accordance with the same systems

used to forgive some or all the debt of companies, local companies, medical pharmaceuticals and banks in their buyouts. i just want, it needs to be a balance. i thank you for your time. >> host: ms. hicks, anything to that? >> guest: i guess just going back to the other comment of trying to again credit card late fees to student debt, the concept may be the same but those are two different avenues and aspects. i do agree that there are some predatory practices in student lending a land which i do work on that issue as with other also predatory practices when it comes to credit card t late fee. and what i can say to mesh those two together is predatory

practices in any financial system, any financial set up that put consumers last and industry first is just wrong. >> host: there was a comment about the cfpb's proposal,, this come from the credit union national association, the the president jim nussle think that the organization their association strongly opposes the proposal as any reduction in late fs safe harbors will have significant negative impact on many small committee based credit unions. s not only will the proposal reced access to safe and fordable open in credit but it's brought it back clearly wants the careful consideration of a small business review panel and its irresponsible for the go to bypass that statutory obligations under the small business regulatory enforcement fairness act, which was designed to calculate the impact on small entities. there's the statement but our credit unions going to be affected disproportionately because of this proposal or do they take a different approach when it comes too late fees? >> guest: credit unions depend

on credit card late fees more than the big banks do. that's just a numbers game. they also are extending credit to subprime borrowers a lot more than bigger banks. that's also a numbers game. yes, credit unions may have something to learn about, they make it priced out of the card issuer again, but i will say this, if it is your business practice toyo make money on the backs of low income people and you are intentionally preying on people that you know cannot pay the credit that your issuing them plus the interest plus a credit card late fee, maybe you shouldn't be doing business in that area. >> host: let's hear from simone in north carolina.a. simone, go ahead please. >> caller: i am a senior, 69, have been through the flu, covid, raging diabetes so it's been hard for me to pay my

creditors. but goldman sachs one of the biggest banks around sit and armed police sheriff to my house, which was so embarrassing. is that a normal way to collect money to get, , you know, to pay the creditors? it sure got my attention. >> guest: no, that is not the normal way to collect on any credit. you probably should make an complaint with the cfpb and the ftc about that. >> host: careen in springfield virginia running a little short of time but go ahead, please, a gentleman called and said people know what they're getting into when you get these cards. that's just not true. if you're late on one card then they will change all your agreement under of the cards. so they willl jack at the entrance rates to 29% which used to be illegal back in the '80s. i i hope she gets her loan late fees through 11 careen in

virginia. is what she set about how an extension of the card you may own, other impacted on this potentially impacted? >> guest: the credit card actly in 2009, i used to be something and that's why the credit card act came into play to forbid that. so that should not be happening, and if it is happening is running afoul of the law. >> host: sheila in connecticut. connecticut. hello. your next up. >> caller: good morning. i respect what you're talking about because i have credit cards and i guess my question is, following which are telling us about, about -- [inaudible] because they give you, they send out these huge discount card, take this card, look at the rates, it's like 288, 36, very high. i think are the actually seeking

out, i hate to say low income areas like where i'm from? [inaudible] things happen and you lose a job, you might miss a payment. and then charge of astronomical amounts. it seems like there putting us back in the whole but by the same instance they will still send out these cards, like you know that they're going to gain more from us. intermittently, maybe not long-term but with the volume of people that are taking these may be fromki lack of knowledge or just an immediate need for money because there are so many. i mean, it seems almost like they are, i think they're taking our money intentionally because it's a business too do so. is that the kind of legislation we're trying, they're trying to put into place to stop that?

i hear people call in, that's not necessarily chase. >> host: thanks, sheila. >> guest: what i will say to she is there's a report out that look at the top 20 banks that depend a lot of junk fees, 10% or more, more of the total assets of junk fees. with the did find is those banks set up shop in communities and counties that are living below the national poverty level, and communities and counties that are living below, the households are not making thehe meeting national income. so yes, banks are definitely preying on low income consumers and offering them credit that theyst know they cannot afford. >> host: our guest organization is the americans for financial reform, ourfinancialsecurity.org is a website if you want to check out the work ticket when it comes to late fees of credit cards