We’ve all received credit card offers in the mail. You know, the ones that announce on the envelope, “Congratulations! You've been preapproved for our new platinum card!”
Congratulations! Are you kidding me?
Here’s what that message really means: “You’re great at dancing cheek-to-cheek with banks and spending money that isn’t yours!” The credit card company recognizes your talent by raising your limit. That way, you’ll spend more money, pay more interest, and help them make a bigger profit.
Yuck! Can you tell I’m not a fan? I hope you aren’t, either.
Now, I typically like to write about things I’m for rather than against, but I’ve made a special exception here. That’s because research shows that these little cards are doing major damage to our peace, contentment, and potential to steward everything God has blessed us with for His glory. Proverbs 22:7 says, “The rich rule over the poor, and the borrower is slave to the lender” (NIV). Many Americans are slaves to their credit card companies, with an average balance of more than $15,000! That’s not good stewardship.
So how, specifically, can credit cards mess you up? Let’s take a look.
1. Credit cards fuel temptation.
Without a credit card in our pocket, we aren’t tempted to spend money we don’t have. We’re also better at distinguishing between our needs and our wants. It’s a lot harder to part with a Benjamin than to swipe a card for a $100 purchase. Am I right?
2. Credit cards make us think we’re winning financially when we aren’t.
Many Americans think they’re doing pretty well with money just based on the amount of plastic they have in their wallets. They think, All these companies are willing to lend me money, so they must trust me, which proves I’m doing something right!
What’s worse, this belief starts early. Credit cards have been so well marketed that even my kids ask if they can hold my membership cards and hotel key cards all the time. They’ve learned through marketing that having plastic is cool!
Yep, we’re working on that one.
3. Credit cards reverse the budgeting process.
Budgeting for a credit card payment is like driving forward while looking in the rearview mirror. Budgeting should happen before a purchase, not after. The last thing we need is a statement this month telling us how much of last month’s money we spent on something for next month. Good stewardship means being proactive, not reactive.
4. Credit cards come with tremendous opportunity cost.
Compound interest is so powerful—and it can work for us or against us. When we make credit card payments, that money goes not just to stuff we’ve already consumed. We’re also paying interest—often up to 21%! But if we redirected that monthly $100 payment into a good growth stock mutual fund or a Roth IRA for 40 years instead, we would have more than $1 million!
As my friend Chris Hogan often says, interest paid is a penalty, but interest received is a reward.
So do you hate credit cards yet? I sure hope so. No matter how enticing the marketing is, credit cards are not designed to add to our lives. They only subtract from them in a big way.
The problems that debt creates also distract us from the one thing the Bible says we do owe to others: love. Romans 13:8 says, “Let no debt remain outstanding, except the continuing debt to love one another.” (NIV).
So cut up your credit cards, pay off the bills, and commit to living a life full of love, not debt.