Your Library Card and Your Credit Card have More in Common Than You Think | Renee & Shanice

Updated: Jun 7, 2020

Good morning Honeys, Happy Hump Day!

How is your morning going?

I love when financial experts say that understanding interest rates is not rocket science. It might not be rocket science, but for those of us who failed high school math, it’s like asking me to find the route number of 56. Not impossible, but I would need some help from Alexa.

What is Interest?

Interest works the same as library late fees. When you were old enough, you applied for a library card and to which you gave your personal information, to be able to take out a limited number of books.

It was the first time you signed your name on the back of a card. With the agreement to bring the books you've borrowed back before the due date. If you neglected to do so, the library would then charge you a daily fee until the books were returned.

This is the same way interest on credit cards work. You agree to borrow a limited amount of money, with the agreement to pay the money back in full and on time. If not, you will be charged a daily fee, which is interest

How is your interest calculated?

Let’s say you borrowed 5 books, but you have the right to take out 10. But you forget that you even took the 5 books and you miss the due date to return them. Consequently, the library will then charge you a late fee based on how many books you took and how many days past due they were.

So, if you were 10 days late and the library charges 25 cents per day for the 5 books, your fee when the books are returned, would be $12.5. Yes, I need a calculator to do this.

Just like with library fees, interest on your loans is charged daily after your grace period has ended. The longer you take to return the books, or the money borrowed, then the more fees you will accumulate.

And if you never return your books, you will be banned from ever taking books from your local library again.

What factors control your interest rates?

Let's imagine that every time you borrowed a library book and would return on it time, you would be given extra perks at the library. Like for instance, priority seating at the smart table. You know the table I'm talking about, the one where all the smart students sit, huddle like a “Google Think Tank” or allowing you to borrow more than 10 books at a time.

What I'm saying is that interest rates are calculated based on good behavior, I.E. your credit score. A good credit score reflects that you're trusted, or that you've borrowed enough books to qualify you to sit at the smart table.

You need an excellent credit score to get a better interest rate.

Note that I didn't say you have to bring back all your books on time since the library needs to make their money too. That's why the library is not very selective when giving out library cards.

TTYL and by the way…have a great day

Don’t forget to Like and Subscribe – No late Fee but only for the next 21 days. Kidding.

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