Should Christians Have Credit Cards?

There is a legend -- whether urban, suburban or rural -- about credit cards. It's brief and goes like this: A person must have one.

The short-version response to the legend is this: Don't establish credit unless you have a specific purpose for it, and you know how to use it wisely.

Lenders say that you should establish credit early, in case you need it. What they don't tell you is that the longer you can go without credit, the less you will depend on it later. The Bible tells us: "A sensible person sees danger and takes cover, but the inexperienced keep going and are punished" (Proverbs 22:3).

Is it wrong for Christians to use credit cards? No. Credit and credit cards do not cause financial problems. It is the misuse of credit and credit cards that create financial problems. Through discipline, any consumer can enjoy the convenience of credit cards without falling into the debt trap often associated with the use of credit cards.

The following suggestions will help you control the use of credit cards.

-- Ask your bank for an extra checkbook register (usually they are free) to keep track of credit card purchases and payments -- just as you would record checking account transactions.

-- Use credit cards for budgeted purchases only.

-- Just because you might be able to afford something, does not mean you have to buy it.

-- Carry a credit card with you only if you have a zero or near zero balance. If you have a credit card balance, put the card in a safe inconvenient place and don't carry it with you.

-- Retain only one all-purpose, no-fee credit card. Cancel all others. Accept a credit limit that you can easily pay in full on your present income, and reject all credit limit increases.

-- If stores add a surcharge to your bill for paying with a credit card, you can refuse to pay it. Most credit card companies don't allow vendors to add surcharges to credit card purchases.

Credit card interest represents a very large waste of money, so pay your bill off every month during the grace period so you don't pay interest charges. If your credit card company charges you a fee for not carrying a balance, cancel the card.

The first time that you have a credit card bill you cannot pay in full, charge no more and then pay the balance as soon as possible. Make the payments as early in the billing month as you can or else make two smaller payments a month if you can't pay early. Most banks calculate interest on the average daily balance, so the larger the payment and the sooner in the month you make it, the more will apply to the principal.

To steer clear of financial problems, avoid the traps that cause those problems -- for most families that means the misuse and abuse of credit cards. If you can function without credit cards, it's to your advantage. If you really need a credit card, discipline your use and pay off the balance monthly; that will ensure that your credit card privilege will not be abused.

If you must have a credit card, try using a debit card. A debit card works like a check and it debits your checking account the amount you charged. If you need a credit card in order to confirm hotel and car rental reservations and they will not accept a debit card, store the credit card in a difficult-to-access place so you will not be tempted to use it for other things.

Before making application for a credit card, shop around and compare interest rates, annual fees and services of different credit card companies. Be aware of finance charges and the expected monthly payments. Check to be sure there will be no hidden charges that can be applied to the bill. It is also advisable to get a credit card that is widely accepted.

However, before you commit, be sure to read all of that fine print on the credit application contract -- and read it carefully. Creditors are required to state the cost of borrowing in common language so that the customer can figure out exactly what the charges for borrowing will be.

The difficulty people encounter when they attempt to reestablish credit reinforces the importance of keeping your bills paid and up-to-date. Remember, it takes a long time to build up a good reputation but very little time to destroy it.

The fact is that credit cards don't ruin a person's financial reputation -- the person ruins his or her own reputation through the misuse or abuse of credit cards. And, that sort of abuse can damage more than your financial reputation.

God's Word offers us an important truth in Proverbs 22:1: "A good name is to be chosen over great wealth; favor is better than silver and gold."

Finally, if you are not interested in those unsolicited or pre-approved credit applications you receive in the mail, don't throw them in the trash. A thief may find them and take out an account in your name and begin charging. Destroy these applications, cut them up and dispose of the pieces in different waste receptacles. Or, mark through the application and mail it back to the sender in the postpaid envelope that came with the offer and note on the application that you want to be removed from their mailing list.

To stop other offers from being mailed to you write t Equifax Options, PO Box 740123, Atlanta GA 30374-0123, or call (888) 5-OPT-OUT. Along with a request to remove your name from credit application mailing lists, include your name, full mailing address, Social Security number, and signature. Equifax is one of the three major credit reporting agencies. They will remove your name from the list they provide and will forward your request to the other two agencies: Experian and TransUnion.

Howard Dayton is co-founder of Crown Financial Ministries and the current host of Crown's radio program, "Money Matters." Dayton and the late Larry Burkett joined forces in 2000 when Crown Ministries, led by Dayton, merged with Christian Financial Concepts, led by Burkett. The new organization became Crown Financial Ministries, on the web at www.crown.org.