How Fast Is Credit Card Debt Hurting You?

Is Your Credit Card Costing You More Than You Think?

Credit vouchers have been around in some form since the 1800s, but plastic credit cards as we know them today have only been used since the 1960s¹. In a culture that often encourages instant gratification and consumerism, it's easy to fall into the trap of overspending and accumulating credit card debt. But what does the Bible say about credit card use? And how can you manage your finances God's way and avoid the pitfalls of credit card debt? More importantly, How Fast Is Credit Card Debt Hurting You?

Check out the full podcast episode:

The True Cost of Credit Card Debt

Before we dive into the biblical perspective, let's look at the financial implications of credit card debt. The average credit card interest rate in the U.S. was around 20.09% as of March 3, 2025². That means if you have a $5,000 balance and only make the minimum payment, you'll be in debt for about 23 years and pay almost $8,000 in interest²!

But interest is only part of the equation. Credit card companies also charge various fees, such as:

• Annual fees: Some cards charge an annual fee, which can range from $95 to $500³.
• Late payment fees: If you miss a payment, you'll likely be charged a late fee, which can be $15 or more³.
• Balance transfer fees: If you transfer a balance from another card, you may be charged a fee of 3–5% of the transferred amount³.
• Foreign transaction fees: If you use your card abroad, you may be charged a fee of around 3% per transaction³.

These fees can add up quickly, increasing the overall cost of your credit card debt.

Beyond the financial costs, credit card debt can also negatively impact your credit score and your mental health. Your credit score is a number that represents your creditworthiness. Lenders use your credit score to determine whether to approve you for loans and what interest rates to offer. A lower credit score can make it more difficult to get approved for loans, rent an apartment, or even get a job⁴. Consistently spending beyond your means with credit cards can lead to significant debt accumulation that might become unmanageable over time. This can lead to substantial financial stress and anxiety⁵.

One of the biggest factors that affect your credit score is your credit utilization ratio. Think of your credit limit like a bucket, and your outstanding balance is the water in the bucket. Your credit utilization ratio is the percentage of the bucket that's filled with water. A high credit utilization ratio—meaning your bucket is almost full—can significantly lower your credit score⁶.

In addition to the risks mentioned above, using a credit card can also increase your risk of identity theft. Hackers can steal your payment details when you shop online or in person⁷.

The Psychology of Credit Card Spending

So why do we overspend with credit cards? There are several psychological factors at play:

• Instant gratification: Credit cards allow us to buy things we want without having to pay for them immediately. This can lead to impulsive buying decisions, where we focus on the pleasure of acquisition rather than the long-term financial consequences⁸.
• Social influences: We're constantly bombarded with messages that tell us we need to buy certain things to be happy and successful. This can create pressure to spend to keep up with perceived social standards, even if it means going into debt⁸.
• Emotional spending: We often use spending as a way to cope with emotions like stress, sadness, or boredom. Credit cards make it easy to give in to these emotional spending sprees, leading to regrettable financial decisions⁸.
• Painless payments: When we use a credit card, we don't physically see the money leaving our wallets. This can create a disconnect between the purchase and the payment, making it easier to overspend⁹. Credit cards are insidious because they disconnect the pleasure of buying from the pain of paying¹⁰.

Credit card companies are well aware of these psychological factors and use them to their advantage. They offer rewards programs, such as cashback and travel miles, to incentivize spending¹¹. They also make it easy to apply for cards and increase credit limits.

Ethical Considerations for Christians

Beyond the biblical principles of stewardship, contentment, and debt, there are also ethical considerations for Christians when it comes to credit card use.

One concern is that credit card companies often target vulnerable consumers with high-interest rates and fees¹². This can create a cycle of debt that is difficult to break free from. As Christians, we are called to love our neighbors and to be just in our dealings with others. This includes being mindful of the impact our financial decisions have on others.

Another ethical consideration is the environmental impact of credit card manufacturing and use. The production of plastic cards requires significant resources and energy, and the disposal of these cards can contribute to pollution. As Christians, we are called to care for God's creation. This includes being mindful of the environmental impact of our consumption habits.

Christian Perspectives on Credit Card Use

The Bible doesn't explicitly mention credit cards, but it does offer principles that can guide our financial decisions. Here are a few key takeaways:

• Stewardship: We are called to be good stewards of the resources God has given us. This includes our money. Wasting money on interest and fees is not good stewardship¹.
• Contentment: We are to be content with what we have, rather than constantly striving for more. Using credit cards to buy things we can't afford because we're discontent is not God's best for us¹.
• Debt: The Bible warns against debt. Proverbs 22:7 says, "The rich rules over the poor, and the borrower is a slave to the lender." ¹³ When we're in debt, we're not truly free.

So, should Christians use credit cards? The answer is not a simple yes or no. It depends on the individual's self-control, wisdom, and understanding of the potential dangers of credit card debt¹. While credit cards are not inherently evil, they can hinder our ability to be generous and prioritize God's kingdom¹³. When we're focused on paying off debt, we have less to give to God's work and to those in need.

If you're going to use a credit card, it's crucial to use it responsibly. This means:

• Paying your balance in full each month: This will help you avoid interest charges and keep your credit utilization low¹⁵.
• Tracking your expenses: This will help you stay aware of your spending and avoid overspending¹⁶.
• Avoiding impulse purchases: Wait at least 24 hours before making any non-essential purchases¹⁷.
• Praying for God's guidance: Ask God to help you make wise financial decisions¹⁸.

Alternatives to Credit Cards

If you're looking for alternatives to credit cards, here are a few options to consider:

• Debit cards: Debit cards allow you to spend only the money you have in your checking account. This can help you avoid overspending and debt¹⁹.
• Prepaid cards: Prepaid cards require you to load money onto the card before you can use it. This can be a helpful way to budget and avoid overspending¹⁹.
• Cash: Paying with cash can make you more mindful of your spending. It can also help you avoid fees and interest charges²⁰.

Budgeting Your Way to Financial Freedom

Creating and sticking to a budget is essential for managing credit card debt and achieving financial freedom. Here's how to get started:

1. Track your spending: Use a budgeting app, spreadsheet, or notebook to track where your money is going.
2. Create a budget: Allocate your income to different spending categories, such as housing, food, transportation, and debt repayment.
3. Identify areas to cut back: Look for areas where you can reduce your spending, such as dining out or entertainment.
4. Set financial goals: Having clear financial goals, such as paying off debt or saving for a down payment on a house, can help you stay motivated.
5. Pray for God's guidance: Ask God to help you be a good steward of your resources and to make wise financial decisions.

Practical Tips for Managing Credit Card Debt

If you're already struggling with credit card debt, here are some practical tips to help you get back on track:

• Stop using your credit cards: This may seem obvious, but it's the first step to getting out of debt²¹.
• Make more than the minimum payment: This will help you pay off your debt faster and save money on interest²².
• Consider a debt consolidation loan: This can help you simplify your payments and potentially get a lower interest rate²³.
• Seek Christian financial counseling: A Christian financial counselor can help you develop a personalized plan to get out of debt and manage your finances God's way²⁴.

Conclusion

Credit cards can be a helpful tool, but they can also be a source of temptation and financial trouble. As Christians, we need to be wise and discerning in our use of credit cards. By following biblical principles and practical tips, we can avoid the pitfalls of credit card debt and manage our finances God's way.

Take control of your finances today. Seek God's guidance, create a budget, and explore alternatives to credit cards if necessary. You can experience the freedom and peace of mind that come with living debt-free!

Works cited

1. Should a Christian use a credit card? | GotQuestions.org, accessed March 9, 2025, https://www.gotquestions.org/Christian-credit-card.html
2. Current Credit Card Interest Rates | Bankrate, accessed March 9, 2025, https://www.bankrate.com/credit-cards/advice/current-interest-rates/
3. 6 Reasons Why Using Cash Is Better Than Credit, accessed March 9, 2025, https://www.primewayfcu.com/blog/3-reasons-why-using-cash-is-better-than-credit
4. How does credit card debt affect credit score? - Chase Bank, accessed March 9, 2025, https://www.chase.com/personal/credit-cards/education/credit-score/how-does-credit-card-debt-affect-credit-score
5. How To Prevent Overspending with a Credit Card - Chase Bank, accessed March 9, 2025, https://www.chase.com/personal/credit-cards/education/basics/how-to-prevent-overspending-with-a-credit-card
6. How credit card debt affects your credit score - MMBB Financial Services, accessed March 9, 2025, https://www.mmbb.org/resources/e-newsletter/2022/june/how-credit-card-debt-affects-your-credit-score
7. Cash Vs. Credit Cards: The Pros And Cons And How To Choose - Rocket Money, accessed March 9, 2025, https://www.rocketmoney.com/learn/debt-and-credit/cash-vs-credit
8. The Psychology of Credit Card Debt: How to Break the Cycle - Money Fit, accessed March 9, 2025, https://www.moneyfit.org/psychology-of-credit-card-debt/
9. Why Using a Credit Card Makes It Easier to Overspend - myFICO, accessed March 9, 2025, https://www.myfico.com/credit-education/blog/credit-card-overspend
10. The Psychology of Spending | MIT for a Better World, accessed March 9, 2025, https://betterworld.mit.edu/spectrum/issues/winter-1999/the-psychology-of-spending/
11. Overspending on credit cards? Here's the psychology you need to understand - Mint, accessed March 9, 2025, https://www.livemint.com/money/personal-finance/overspending-on-credit-cards-heres-the-psychology-you-need-to-understand-11740467305697.html
12. Credit Cards and Virtue Ethics - The Prindle Institute for Ethics, accessed March 9, 2025, https://www.prindleinstitute.org/2023/09/credit-cards-and-virtue-ethics/
13. Should a Christian Use Credit Cards? - SeedTime Money, accessed March 9, 2025, https://seedtime.com/should-a-christian-use-credit-cards/
14. How Important Is It for Believers to Be Debt Free? - FaithFi, accessed March 9, 2025, https://www.faithfi.com/eternal-perspective-ministries/how-important-is-it-for-believers-to-be-debt-free-4097
15. What Does the Bible Say About Credit Cards? - All Resources | Crown Financial Ministries, accessed March 9, 2025, https://www.crown.org/all-resources/what-does-the-bible-say-about-credit-cards/
16. How Should I Track My Credit Card Spending? - Skyla Credit Union, accessed March 9, 2025, https://www.skylacu.com/learning-guidance/tracking-credit-card-spending
17. 6 ways to break bad credit card spending habits - CBS News, accessed March 9, 2025, https://www.cbsnews.com/news/ways-to-break-bad-credit-card-spending-habits/
18. Should a Christian have or use credit cards? - ChristianAnswers.Net, accessed March 9, 2025, https://christiananswers.net/q-eden/creditcards.html
19. Explore These 5 Alternatives to Credit Cards - Take Charge America, accessed March 9, 2025, https://www.takechargeamerica.org/explore-these-5-alternatives-to-credit-cards/
20. Cash vs. Credit Card: Which Should I Use? - Ramsey Solutions, accessed March 9, 2025, https://www.ramseysolutions.com/debt/cash-vs-credit-card
21. Tight Budget? How to Handle Credit Card Debt - Peoples Security Bank & Trust, accessed March 9, 2025, https://www.psbt.com/Learn/Resources/PSBT-Corner-News/Handle-Credit-Card-Debt
22. Tips to Pay Off Credit Card Debt - Nationwide, accessed March 9, 2025, https://www.nationwide.com/lc/resources/personal-finance/articles/credit-card-payoff-tips
23. 8 Ways to Manage and Pay Off Credit Card Debt, accessed March 9, 2025, https://www.incharge.org/understanding-debt/credit-card/how-to-manage-credit-card-debt/
24. 5 Signs You May Need a Certified Christian Financial Counselor With Art Rainer - FaithFi, accessed March 9, 2025, https://www.faithfi.com/faithfi/5-signs-you-may-need-a-certified-christian-financial-counselor-with-art-rainer-6370