My wife and I have experienced the sting of overspending on credit cards. Payments continued long after the dinner was eaten, the vacation was taken, or the gift was opened. After about seven or eight payments we would scratch our heads and wonder “what in the world did we even buy?”
Overspending was not wise and it definitely would not have been considered faithful stewardship. What can I say? We were young and dumb and needed direction.
Was using a credit card a sin, though? Is it sinful to use credit cards? Should Christians use credit cards?
Using credit cards is not a sin. Many of us should avoid them, though. Additionally, the use of credit cards does not make one savvy or sophisticated. There are only a few legitimate benefits to using credit cards. Credit cards, like most things in life, are complicated. Christians should lean strongly to abstaining from the use of credit cards.
Walk with me and discover why.
And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God. (Romans 12:2)
From what I can tell from Romans 12:2, there is an acceptable and perfect will of God. Or said differently there is a permissible and a perfect will of God.
It’s my humble opinion that debt-free living would lean towards the perfect will of God. Credit card use and other debt would fall on the permissible side of the equation.
Is Using A Credit Card A Sin
I’ve already mentioned that using credit cards is not sin. Why?
There is one scripture used more than most to discourage the use of debt.
The rich rules over the poor and the borrower is a slave to the lender (Proverbs 22:7).
Solomon was simply stating a fact but was not giving instructions on how one should live. In grammar, this is the indicative mood rather than the imperative mood.
He basically wrote that if you borrow money, you choose slavery. The behavior isn’t sinful but it most definitely is not encouraged.
“I have the right to do anything,” you say—but not everything is beneficial. “I have the right to do anything”—but not everything is constructive. (1 Corinthians 10:23, NIV)
Credit card use is not a sin. It’s not the wisest choice, however.
Is Credit Card Use Financially Savvy
Credit card reward points are a new religion. The adherents of this new religion are zealous and nearly cult-like. Anyone attempting to dissuade them from using a credit card to obtain rewards is considered a redneck rube living in flyover country.
Those who have the intelligence to use their credit cards wisely have entered a new space of sophistication. They are savvy don’t you know? Of course, I don’t understand their brilliance.
Anyone who is fully persuaded that they are going beat Visa, American Express or JP Morgan needs to have their head examined. Reward cards were designed by brilliant marketers with nearly endless resources.
They’ve successfully tapped into the psyche of the consumer and have masterfully exploited it. Shoppers are addicted to using plastic for a 1.5% cashback. Is this really dinging the credit card companies? Nope!
Visa, American Express, and JP Morgan all report net incomes in the billions each year. In order to earn $1,000 with a decent reward card of 1.5% cashback, you would need to spend $66,666. Most families don’t even earn that much money in a year.
Some banks and credit card companies are providing cashback rewards on debit cards. My bank began doing that a few years ago. We’re averaging about $250 in cashback rewards from our bank. We’re not going to get rich but I’m not going to turn it down either.
Do We Spend More With Plastic
Using plastic is less painful than paying with cash. One study indicated that shoppers spent up to 100% more when using a credit card. The most commonly quoted study indicated that consumers spend 12% – 18% more.
I’ve yet to come across a study that indicated people spent less when using a credit card.
I will not discount cashback rewards. If I found a $100 bill on the sidewalk I’m not going to ignore it. However, if I’m paying to get it, it’s not the same.
If I’m getting 1.5% cashback but spending about 15% more am I really beating the credit card company? It’s smoke and mirrors.
Someone is paying for these rewards.
Who Actually Pays
As mentioned earlier, credit card companies and banks are not in the business of losing money. Let’s check the latest figures from four credit card companies and the biggest issuer of credit cards.
| Company | Annual Sales | Annual Net Profit |
| JP Morgan Chase | $103.9 billion | $32.4 billion |
| American Express | $36.9 billion | $6.9 billion |
| Visa | $22.9 billion | $12.0 billion |
| MasterCard | $14.9 billion | $5.8 billion |
| Discover | $7.6 billion | $2.7 billion |
(Source: Yahoo Finance)
It’s obvious from the table that credit card companies and banks are not getting bled dry by all of the credit card savants. So where is all of this free money originating?
Stores pay credit card companies a fee for getting their money. Sometimes that fee can be north of 2% depending on the retailer, the volume, and a few other factors. Before a credit card company charges a consumer a penny of interest they are already profitable. Stores are paying a hefty sum to the credit card companies for processing payments.
The stores must be absorbing the financial hit. If you thought that then you would be wrong Retail stores simply pass this cost on to the consumer. Since virtually everyone uses plastic the retailer simply finds a way to pass that cost on to the consumer. Plus we are spending, on average, around 15% more for our purchases.
Aren’t we sophisticated and savvy? No, we are suckers who have fallen hook, line, and sinker for an intricate and complex game of behavioral economics.
You aren’t going to beat these companies.
Two Credit Card Perquisites
Despite my previous rant, there are a couple of benefits for credit card use. You must decide if the risk is worth the reward.
Consumers have better fraud protection when using a credit card vs. a debit card or cash. If your debit card is lost or hacked the thief is stealing your money. Your liability depends on when you discovered it and reported it. You could be liable for up to $500.
If your account is siphoned dry you will eventually get most of your money back. The process will be painful and you will feel violated. It could also wreak havoc on your finances and create a domino effect on your other bills.
If your credit card is stolen or hacked the thief does not have access to your money. It’s the credit card company’s money. Your liability on a lost or stolen credit card is limited to $50.
If your cash is lost or stolen you’re simply out of luck. Perhaps you could get some insurance coverage unless your deductible is high.
Warranty Protection
Most credit cards double manufacturer warranties. This could be valuable when buying big-ticket items such as appliances. Most manufacturers are only providing a one-year warranty so an extra year would be nice.
Those are the two definitive credit card rewards: less liability and warranty protection.
Is it worth it?
Is Credit Card Use Faithful Stewardship
Credit cards should never be used to buy things that you cannot afford. If you are unable to pay for a vacation with cash then you can’t afford a vacation. Putting the expense on a credit card is poor stewardship and proves that you are discontent with God’s provision.
Financial hypocrites buy things that they cannot afford with money they do not have to impress people they do not know.
Credit cards should be used with extreme caution.
It’s estimated that 59% of people using credit cards with a reward component carries a balance from month to month (CNBC). The average family pays around $900 per year in credit card interest. To get the same amount in cashback rewards a person would need to spend around $60,000 per year.
As of today, the average credit card interest rate in the United States is 17.2% (creditcards.com). Credit card companies can charge 17.2% but only give out around 1.5% in cashback rewards. That’s some funny math.
Don’t even get me started on the airline miles program. “I’ve not paid for a flight in five years” Mr. Savant brags to his friends. No, but vacations require rental cars, hotels, restaurants, and entertainment. Just stop! You’re just not as savvy as you think!
“Credit Cards are the worst investment that you can make” (Mark Cuban)
Caveat Emptor
The credit card risk is greater than the reward. More than half of credit card users carry a balance and are paying interest. It’s pretty clear that the odds are not in our favor.
Credit card use is not sinful but it’s also not faithful stewardship.
It’s highly unlikely that Jesus is going to shower you with praise because you cracked the credit card code and earned 1.5% cashback. Retailers artificially increase prices to cover the credit card expense. Plus, we spend more when using plastic. At best it’s a wash. At worst you are paying 17% interest on a latte from two years ago.
Credit card use should be limited to online purchases and when making big-ticket purchases. Balances should be paid off the same day the charge is made.
If you’re a business owner and use credit cards for daily expenses due so with extreme caution.
If you’re using a credit card and at any time you can’t pay the balance, cancel the card immediately. The law of averages is legitimate. If you play with a snake long enough you will eventually get bitten.
The Bible and Credit Card Debt
There are well over 2,000 Bible verses referencing money. The Bible never indicates that borrowing money is a sin. It does, however, discourage its use.
Just because you can use credit cards doesn’t mean that you should. Our primary focus should not be squeezing out a few hundred dollars in cashback rewards but to be faithful stewards of God’s resources.
Moreover, it is required of stewards that they be found faithful. (I Corinthians 4:2 ESV)
A Few Final Tips
If you’re currently mired in debt it’s time to get out. If you have credit card debt the first step is to stop using it immediately. Secondly, get on a written budget and prioritize your spending. Next, develop a debt destruction plan.
One last thing everyone should do is to opt-out of any preapproved credit card offers. You can opt-out for five years or permanently — the choice is yours. This will minimize the odds of identity theft and will also reduce the temptation to get a new credit card that you don’t need.
So, what’s in your wallet?
Tim Kiser is a certified financial coach and the author of The Profit Dare: Winning at Wealth Without Losing Your Soul.