Do I know how to use a credit card? What a silly question! Of course I do. You just hand it to the clerk whenever you want to buy something and sign the receipt. Make the minimum payment and you can get lots of free credit. And don't worry if you max out your card. The company will probably raise your limit, and you are likely to get more offers through the mail for more cards than you can possibly use."

Does this sound familiar? It should. It's the approach millions have taken when using those little plastic cards that make purchasing items so simple and easy.

However, this common financial practice costs many families dearly. According to a recent report, the average American consumer now owes $7,000 of credit card debt—an amount sometimes referred to as "revolving credit" because many consumers typically pay only the interest and a bare-minimum amount of principal and thus never fully repay the entire sum.

The implications behind such debt are sobering. High rates of interest—up to more than 25 percent voraciously consume one's income. Those with such debt flirt with financial disaster and often find their financial goals stymied or seriously delayed. Many consumers, men and women alike, find themselves saddled with so much debt that they cannot borrow a penny more. When this happens people may be forced to pass up life long dreams, as well as once-in-a-lifetime opportunities, just to make the minimum monthly payments on credit card balances.

To understand the significance of credit card debt, consider the picture for many U.S. families: "Total household debt—including credit cards, car loans, mortgages, and student loans—topped 100 percent of disposable annual income late last year for the first time" (Paul Lim and Matthew Benjamin, "Digging Your Way Out of Debt," U.S. News & World Report, March 19, p. 54).

The average American spends more than he earns. Credit card debt is perhaps the most visible symptom of a bigger problem. How do people find themselves caught in such circumstances?

The spending trap

For many young people, running up debt begins innocently enough. Entering college, many find they must finance their education through student loans. Colleges and universities, operating as businesses, help new students apply for and receive educational loans with favorable terms.

Not to be left behind, credit-card companies pay colleges and universities significant fees to be allowed to offer students their services. These companies have learned that young people feel great loyalty to their first credit card. It's simply good business to be the first to issue a young person a card.

With the implied promise of high-paying jobs in the near future, many students enter the credit world thinking their debt will disappear as quickly as it was acquired—in just a few years after graduation. Regrettably, most graduating students find reality to be much different from their naive expectations. Continuing to charge more than they can comfortably repay, many find themselves in a spending trap in which rising debt matches or exceeds rising incomes.

Young people, of course, are not the only ones caught in such financial circumstances. Many adults have likewise given in to the allure of easy credit. Advertisers tell us we "deserve" their new and improved products—and most of us willingly believe them. The desire to enjoy life to the fullest with the latest entertainment, clothes and gadgets can be irresistible. Taken too far, it is easy to break God's commandment against coveting (Exodus 20:17; Deuteronomy 5:21)—placing an object of desire in a more important role than God Himself.

People can also be sucked into the vortex of credit card debt via unemployment. If one has no savings, adding debt to one's credit cards is often the quickest way to cover basic living expenses. But, then, when they do secure a new job, many find their credit cards reach the maximum limit, and repayment schedules become a severe burden.

Although most of us don't like to consider negative possibilities, we cannot avoid financial disasters by simply ignoring reality. Given today's financial climate—a slumping stock market and loss of thousands of jobs as companies "downsize,"some economists predict "personal bankruptcies this year will break 1998's record of 1.4 million" (ibid.).

Economic downturns inevitably push more people to the edge of financial disaster. Only those who have taken precautions or avoided precarious situations survive. Cause and effect take their inexorable toll. What can you do to avoid becoming a sad statistic?

Biblical guidelines for financial stability

Since God created us, He understands how we think and operate. When it comes to finances, God reveals in His Word a simple but profound truth: "The rich rules over the poor, and the borrower is servant to the lender" (Proverbs 22:7).

When we are in debt, we serve those holding our debt. In the case of our credit card masters, we serve them well. After all, what investor wouldn't like to receive a 25 percent return on his investment?

The apostle Paul wrote, "Let no debt remain outstanding . . ." (Romans 13:8, New International Version). God expects Christians to fulfill their financial obligations. Not doing so often breaks God's commandments against lying and stealing (Exodus 20:15; Deuteronomy 5:19; Leviticus 19:11).

In the light of sound biblical advice, the way to financial freedom is through repaying debt, then avoiding indebtedness whenever possible. Though it may make more sense to finance essential items of long-term value such as homes, cars and education, credit-card debt is something most people can avoid. Consider how to avoid it.

How to pay off credit-card debt

If you find yourself making interest payments every month on your credit cards and want to eliminate that kind of debt, the first step is to assess your income and expenses. Total your monthly expenses and subtract them from your income. This is your disposable income after expenses, the amount you have each month to use as you determine.

The next step is to stop charging items on your credit cards. Pay cash for items you must buy. Then analyze your credit-card debt. Determine which credit cards are charging you the highest rate of interest. You may be able to transfer balances from cards with higher rates to those offering lower rates. For more information about wise use of credit cards, see "Tips for Managing Credit Cards."

Next, rank the cards in order of the interest rate charged, and use your disposable income to completely pay off the card with the highest rate. Once that card is paid off, close the account and destroy the card. Then focus your attention on the next card, and continue doing the same until all of the debt on your cards has been completely paid. Once your credit-card debt is gone, you're much better off with only a few cards—not the dozen or more carried by so many people.

How to use a credit card

After you've paid off all your credit-card debt, it's time to consider how such cards can be properly used. They are extremely convenient tools—attested to by the fact that people charged more on credit cards last year than they spent in cash—but the wise use of credit cards is important. How do credit-card-savvy consumers use their cards?

The most important step in responsible credit-card use is to completely pay off the bill every month. Think of the credit card as using cash that is reserved each month for the items charged. This way no interest accrues, and credit cards become legitimate and helpful financial tools. They become our servants instead of the other way around.

Most people don't realize that God has much to say about how we use our money. As our Creator, He is the One who gives us the power to earn money and enjoy what it can buy (Ecclesiastes 5:18-19). In a parable of the coming Kingdom of God, Jesus Christ described Himself as giving His servants money (talents) to manage. How His servants managed those funds determined their reward in the Kingdom (Matthew 25:14-30).

What's the lesson of this parable? The way we manage our money reveals to God much about our character. GN