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The president will head to New Mexico today is holding a town hall meeting on credit card reform.
The event comes as congress works to pass legislation all on the credit card industry reforms that the president would like to have been by the Memorial Day deadline.
But there's some who argue that the real problems with credit cards have nothing new DC or to the companies themselves are they in the hands of people who use them.
That our fall dot com as a senior VP for government affairs at the financial services.
Round table if that Scott welcome to -- it is an unpopular subject there was a very interesting article an op Ed I believe -- in time a couple of days ago.
Talking about the American psychology the average household of eight grand in debt and that shockingly.
Study -- shown on people paper things cash vs credit card they're willing to pay twice as much.
If they use a credit card -- -- they used cash how much can reforms.
I think for -- -- that they're willing to pay twice as much but if they don't manage their credit card properly they end up paying twice as much as cash.
-- I think what we need here is a big push for financial literacy of finance education.
-- American consumers understand the terms of their contract and can use their credit wisely.
That's shared responsibility between industry in the consumer and industry is doing what -- can help increase disclosures and help increase financial education.
And you'll see both of those in the coming weeks included in the -- -- -- rules will be increase -- simplified disclosures -- help Americans understand their credit card terms of the credit card.
And help them save money and use it properly.
-- -- on that note would you say that the credit card industry though is it -- -- some of the responsibility.
For consumers getting.
Addicted to credit if you when he used that word because again you know I got got him in the mail get out -- home equity -- and take a trip.
Doesn't that encourage bad behavior.
Yeah I mean it it there's a push pull here because obviously the people have to make a choice.
But the credit card industry filly makes it easy if you wanna make that choice but he also have a third choice not just rip up that -- that does solicitation thrown away.
-- but it's very difficult Americans have become addicted to credit.
And we -- a savings rate that's anemic.
And so what you'll see in the coming months and years is an attempt to shift Americans thinking away from.
Relying on credit cards and using them for long term purchases relive the designed for short term purposes.
And and more towards savings we need to -- for -- rainy day.
As many Americans are struggling now.
And it takes a rainy day fund would have helped it does get through these perceptions so we need to change the thinking in America and the credit mystery -- who is working hard to do that.
But the -- disclosures and financial education financial literacy.
Yeah I mean that that's really it you know there was also I was reading something yesterday about how that people make bad decisions -- get a teaser rate of say 0% for six months.
Verses 7% for the life of the -- or something like that right they'll take the 0% for six months.
Even when it resets the 20% after that time rather than take the lower interest rate that's locked in for the life.
Again how do we just simply educate and I don't know what our schools are teaching people but how do we sit just teach people basic interest rates and how they work out.
-- there's a file fundamental lack of understanding of how the credit terms work and how finance -- and you see a number of states I think Virginia is has bill that's pending.
Financial -- here for its education part of the high school and even grade school curriculum.
The industry spends millions and almost billions of dollars every year on financial literacy programs.
Volunteering thousands and thousands of employees.
Out there helping Americans understand.
These turn these these products which seemed daunting at first but once you drill down aren't that hard to understand.
How well the credit -- -- actually making the statement easier to read where they say hey if you make the minimum payment.
This is how long it's gonna take you pay off your ballots and making it easier to pay off that balance again you have to call the company and find out what the pay off balances.
Yet and -- and then and then -- -- -- the run around when you did that.
If it lists are for your first question.
The Fed's -- new disclosures coming out in in July of next year we'll say if you only pay your minimum.
Here's the effect on your -- that'll be clearly stated the industry doesn't like all those.
Pages and pages of credit card contract the small print but the required by law and now the regulates -- to -- to make that the disclosures easier to understand.
And of all your pay off balances shown every month on your credit card statement the amount that you low in total is showing you shouldn't get the runner on its printed every month right there for you to see how much you low.
And managing that credit and understanding the terms help keep those interest rates low and in the -- is working hard to -- sure makes.
Uphold its shared responsibility help explain the contract from the terms of the American people.
Guys had agreed saying all -- if you borrow money from anybody you're gonna pay back more than you've got I think it you know your mortgages credit cards car.
That's -- our grandparents paid cash.
-- I knew that there is.
There is time value of money is an interest rate factor in the interest is that the cost of borrowing somebody else's money.
And using it for your own purposes but there's good borrowing and there's bad barring its its -- to be able distinguish between the two -- Scott -- with -- financial services roundtable Scott was a pleasure thank you very much Michael.
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