What Happens When the Government Doesn't Pay Its Credit Cards?

Some consumers in Tennessee are dealing with unpleasant credit card bills — the school district’s. Bills for district-issued employee credit cards have regularly gone unpaid, accruing interest and late fees that will ultimately need to be satisfied with taxpayer dollars, a local news station reported.

WBIR 10 News requested financial records for the Knox County school system credit cards, which showed months of late and missed payments, and the county never paid balances in full. At the time of its report (Nov. 4), school officials requested Oct. 7 the county pay a $517.63 minimum payment on a $4,581.30 balance. The bill was due July 11.

In its records request, WBIR received seven invoices and a packet of check requests (when the school needs to pay a bill, officials send a check request to the county for the amount needed), and those records included $143 in finance charges and $49 in late fees across the six credit cards on the account. As WBIR pointed out in its story, Knox County Schools still has at least $4,063.67 in outstanding, months-old charges that continue to accrue interest.

The investigation started when school officials fired employee Roger Underwood for misusing school money. He had one of the six credit cards. Credit card spending can get expensive very quickly, and Knox County taxpayers probably aren’t thrilled to be footing the bill, not only for the fees but also for charges that shouldn’t be made with district cards.

Paying down credit card debt can be a costly, time-consuming project that often raises the question, “How did this happen in the first place?” It’s a frustrating thing to face when dealing with your own bills, let alone the government’s, but the longer it goes unaddressed, the more it costs. Credit card balances of a few hundred dollars may cost you thousands over a lifetime if you can only make the minimum payments — you can see how long your credit card payoff timeline is using this free calculator.

Beyond the out-of-pocket costs of credit card debt, there’s the cost of bad credit. Missing credit card payments will damage your credit scores, which in turn may make it more difficult to access other forms of credit or qualify for good interest rates on loans. Not only will credit card debt hurt your bottom line, you’ll also have to grapple with the obstacles brought on by low credit scores, so make a plan to get out of debt and improve your scores. It’s worth the time. You can check your credit scores for free every month on Credit.com to see where you stand.