GAINESVILLE, Ga. — 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.
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.
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 to: Equifax Options, P.O. 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.
(EDITOR’S NOTE — Dayton is co-founder of Crown Financial Ministries, which partners with the Southern Baptist Convention and Baptist State Convention of North Carolina to offer free money map counseling services to individuals.)
Financial health package
Across three issues of the Biblical Recorder and numerous postings online, the BR staff compiled stories dealing with financial health, budgeting, teaching children about money, stewardship issues, etc. For a complete list, click here.