Does using credit violate Biblical teaching? Romans 13:8 says to owe nothing to anyone. According to at least one Bible commentary, this means a person should not continue to owe a debt if they are able to pay it, unless there has been tacit (i.e., implied) consent by the person to whom the debt is owed. If this is true, a person who owes a debt is not disobeying Romans 13:8, if their credit payments are made on time.
[Note: When we quote Scripture in this article, we use the wording in the New King James Version of the Bible, except when we quote a non-biblical source that is using Scripture from a different version of the Bible.]
Likewise, Psalm 37:21, which says that a wicked (i.e., evil) person borrows and does not pay back, appears to mean exactly what it says; i.e., generally speaking, a person is wicked because they do not repay what they owe, not because they borrow. Furthermore, if a person cannot repay because of unavoidable circumstances such as the loss of their job, it is reasonable to believe that they are not being wicked.
On page 253 of his book entitled The Complete Guide to Managing Your Money, Larry Burkett, a Christian writer and lecturer on family financial matters, stated that the Bible does not teach that a person should never borrow, but it does teach that unwise borrowing is hazardous.
Will using credit damage the reputation of God? Philippians 4:19 tells us that God will provide for all the needs of a Christian. Some people believe that, if a Christian depends on credit to help pay for their needs, other people may get the impression that God is not providing for all of the needs of that Christian.
On the other hand, it may be argued that Christians who keep the terms of their credit agreements are being honest in dealing with their creditors and, therefore, their use of credit should not damage God’s reputation.
In any case, Burkett has expressed the belief that continual borrowing indicates a lack of faith in God. He indicates on page 255 of his previously cited book that, although borrowing is not a sin, dependence on credit indicates that a Christian has not yielded completely to God. [Dependence on credit can be defined as continuing heavy reliance on borrowing. Thus, a person who pays the entire balance on his (or her) credit card statement each month is not dependent on credit.]
Does using credit limit God? Matthew 6:31-33 (like Philippians 4:19, which we previously mentioned, indicates that God will take care of all of our needs, if we “seek first His kingdom and His righteousness” and will give Him opportunity to provide for our needs. By using credit, we may not be allowing God to take care of our needs.
In this regard, Ron Blue, another Christian writer and lecturer on family financial matters, notes on page 62 of his book entitled Master Your Money that, rather than waiting for God to meet their needs, many people prefer to attempt to do so their own way and according to their own timing, whereas Isaiah 55:8-9 informs us, “‘For My thoughts are not your thoughts, nor are your ways My ways,’ says the Lord. ‘For as the heavens are higher than the earth, so are My ways higher than your ways, and My thoughts than your thoughts.’“
Will using credit result in a form of bondage? Proverbs 22:7b says, “[T]he borrower is servant to the lender.” Although this may not always seem to be true, there are certainly many borrowers who would say that they feel as if they are in bondage as long as they continue to owe money to their creditors.
Does using credit presume upon the future? James 4:13-15 cautions against assuming that we will be able to do all the things we want to do in the future, which seems to include being able to pay off our debts. Therefore, if we use credit, we should have a definite source of repaying the entire balance of all of our debts, regardless of what happens in the future. The definite source of repayment may be any one or more of the following:
- Previous savings
- The value of the asset against which you have borrowed, assuming that the asset, unlike a car, does not depreciate in value faster than the loan balance declines
- Other assets that are not encumbered with debt
- Credit insurance, but it is generally very expensive
- Life insurance, although it is beneficial only if you die or otherwise terminate the policy
As a result of the preceding information, you may want to give serious consideration to four guidelines recommended by Blue, which suggest a strict approach to deciding whether or not to undertake debt.
1. Incur a debt only if it makes economic sense, based on the two following criteria:
- The cost to borrow (i.e., the after-tax cost of the interest that you pay) must be less than the economic benefit you expect to receive. [Note: The economic benefit is the income earned and/or the growth in value of the item being purchased.] Relatively few situations involving the use of credit would qualify under this criterion.
Consider the following example. Assume that a person is contemplating using credit that will result in an average annual before-tax interest cost of $1,000. Assume also that the interest is fully tax deductible and that the person has a combined federal and state income tax rate of 30%. Thus, the average annual after-tax interest cost for that person will be $700. To justify using credit in this situation, the economic benefit will need to exceed $700 per year after income taxes.
- There must be a guaranteed way of repayment, as was previously discussed.
2. Both spouses must be free from any anxiety regarding the debt
3. Both spouses must have spiritual peace of mind regarding the debt.
4. Both spouses must decide if the personal goal they expect to achieve by incurring the debt can be met in no other way (i.e., is there not a better alternative?).
And, one thing more: Be sure to pray before you make any decisions regarding your use of credit. Pray sincerely for wisdom and self-discipline in dealing with such matters. James 1:5 says, “If any of you lacks wisdom, let him ask of God, who gives to all liberally and without reproach [i.e., rebuke or disapproval], and it will be given to him.” And Luke 11:9 tells us, “[A]sk, and it will be given to you; seek, and you will find; knock, and it will be opened to you.”