The Theology of Loans and Credit Cards
Home loans, car loans, HECS-HELP loans (student loans) and credit cards, everyone has them, everyone can obtain them but how much thought is gone into getting them and using them? There are over 2000 verses in the Bible that speak of being wise when it comes to finances (Mal 3:10, Pro 13:11, Luk 14:28), or the relationship a person has with it (Ecc, 5:10, 1 Tim 6:10, Matt 6:21,24) but nowhere does it say borrowing money is a sin.
Context needs to be established as many things have changed since the Bible was written - yet the Biblical principles remain the same today. During ancient times lenders would often set outrageously high interest rates and when the borrower was unable to repay the money the borrower would sell themselves to the lender and become their slave. This was not uncommon as they did not have the systems that exist today (e.g. welfare systems, bankruptcy protection, regulatory bodies, etc.) to prevent an abuse of power. In fact, God provided a guiding system to the Israelites to prevent any abuse of power and ensuring nobody became a slave to a lender (Lev 25, Deut 23:19-20).
When a person takes out a loan or spends money on their credit card they are going into debt, they are using money that is not theirs to purchase a product. Though they are both forms of debt there is a large difference between them, one is an investment and the other is an indulgence. Loans (home, car or student) are classified as good debt as they increase one’s net worth or potentially increase future income. Investments always look at the long term and require planning both of which God encourages and blesses (Pro 12:15, 16:9, Luk 14:28, Matt 25:14-30). Credit cards on the other hand are considered bad debt meaning though funds are unavailable at the time, and an item is purchased on the assumption of future income. This is a dangerous assumption as a person should not place trust in their future income but rather trust in God and His leading (Jam 4:13-15). Furthermore, such assumptions circumvent God’s blessings, opting for a quick solution over waiting for God to provide (Isa 55:8-10).
So what does this mean for me? The key concept that God tries to explain is that we need to be good stewards of our money and our debt. Debt is not the issue, but what we are doing with it is. Allow the Spirit to speak as we ask ourselves some questions.
- Is the debt an investment or is it an indulgence?
- Am I living pay check to pay check?
- How are my finances (money and debt) going?
- Should I seek counsel in regards to my debt?
- What is the next investment God wants to be part of?
- Just for the record, I'm not saying debt is bad; I'm saying bad debt is bad.
For example, I personally hold a mortgage, but due to a positive margin in my income I have been able to build savings that will cover approximately four months of repayments in the event I lose my job. I also use a credit card for most things as it helps me track my spending but I know I could pay it off that day. It’s all about stewardship!