How can I avoid credit card traps and eliminate debt problems?
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Since God created us, He understands how we think and act. When it comes to money, God reveals in the Bible 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 we owe. 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).
The way to financial freedom is through repaying debt, then avoiding debt 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.
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, try these steps:
1. 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.
2. The next step is to stop charging items on your credit cards. Pay cash for items you must buy.
3. 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.
4. 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.
5. 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. 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.
For more information, please read our booklet Managing Your Finances.