Watch out for those library fines
With Wall Street still caught up in its liquidity crisis, it's probably a good time for those with squeaky clean credit records to keep them that way. Commentator Susan Lee says you'd be surprised how much even the littlest things can hurt.
Susan Lee
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TEXT OF COMMENTARY
KAI RYSSDAL: If the economy does indeed pitch over into a recession sometime soon, it won't be because consumers aren't doing their part. The Federal Reserve said today we charged almost 4 percent more on our credit cards in July than we did a month earlier. Although it should be said in our collective defense that that's actually a slower rate of increase than earlier in the year.
With Wall Street still caught up in its liquidity crisis, now's probably a good time for those with squeaky clean credit records to keep them that way. But commentator Susan Lee says you'd be surprised by how much even the littlest things can hurt you.
Susan Lee: I was sitting in the dentist's office when I spotted a magazine story about the 10 money mistakes that could cripple your savings. This seemed serious, so I took a look at the list. The usual stuff was there: Don't max out on a home-equity line of credit, don't take on too much credit-card debt, and don't ignore your company's 401k.
But number nine on the list was astonishing: Don't forget to pay your library fines for overdue books? Well, that seemed a little overwrought. Except, as it turns out, it's good advice.
Apparently, libraries all across the country are getting really fed up with people who don't pay their fines. And, increasingly, libraries are turning these miscreants over to collection agencies. Bad enough for the miscreants to have to fend off pesky calls from a collection agency. But worse, collection agencies can report them to a credit bureau and -- whammo! -- there goes their credit ratings.
Now, I'm not suggesting that you're one of those scofflaws. But if you are, the net result might be a lower credit rating. And that will translate into higher interest rates the next time you need a loan for a car, or want a mortgage.
Of course, a reasonable person might ask: Isn't this a gross violation of the principle that the punishment should fit the crime?
Many librarians don't think so. And they have a point. Taking a book out is like entering into a contract. If you default on the contract by not returning the book when it's due, you should be liable for the penalty. Librarians also point out that libraries are public institutions supported by taxpayers. They have a responsibility to chase down every last dollar owed to them.
And if the purpose of punishment is deterrence, then the threat of having your credit rating trashed works -- big time.
So the next time your kid clutches the library's copy of "Scruffy the Tugboat" and begs you not to return it just yet, remember, she very well might have your credit rating in her hands.
Ryssdal: Economist Susan Lee lives in New York City.
