Are Credit Cards Good Or Bad?
Answer: They’re both. Credit cards are good because they provide a very easy way to buy things.
People can buy things they want without having to carry cash or a checkbook.
People can also buy things over the phone and through the mail using credit cards.
Some credit cards can be used in bank machines and can be used for borrowing money from a bank.
But credit cards can be bad because they make it easy for people to buy things that they can’t afford or should not buy.
In fact, many people use credit cards to spend much more than they should.
When you spend too much and can’t pay the whole bill, the credit card company lets you make a small payment and charges you a lot of interest on what you don’t pay.
Misusing credit cards has put many people deeply in debt.
The right way to use a credit card is to use it only for things you have planned and budgeted to buy.
Then you know you can pay the whole amount when the bill comes.
Key verse: Just as the rich rule the poor, so the borrower is servant to the lender. (Proverbs 22:7)
Related verses: Psalm 37:21; Matthew 6:19-21, 24- 34
Related question: Why do some people not like credit cards?
Note to parents: If you have a credit card bill with a finance charge on it, show it to your child.
Explain that this charge is the extra money you have to pay for using a credit card and not paying the bill in full right away.
How Do Credit Cards Work?
Answer: A credit card lets you borrow money from a bank whenever you want to buy something.
The bank gives you the card and says you can borrow a certain amount of money.
When you want to buy something with the credit card, the salesclerk checks to make sure that you have permission to borrow that much money.
The clerk also makes sure you are using your own card and not someone else’s.
If everything checks out OK, the bank, not you, pays for the item.
The bank loans you the money. The salesclerk lets you take home what you wanted to buy.
A little while later, a bill for the amount you borrowed comes in the mail.
You have to pay this bill right away. If you don’t, the bank charges you extra money called interest.
This is how most people get in trouble with credit cards. They borrow more than they can pay back.
Then the interest payments get higher and higher. Sometimes people borrow so much that they can’t possibly pay it back.
Wise people borrow only as much as they know they can pay back.
Key Verses: Do not co-sign another person’s note or put up a guarantee for someone else’s loan.
If you can’t pay it, even your bed will be snatched from under you. (Proverbs 22:26-27)
Related verses: Luke 16:10-13
Related questions: When you use a credit card, why do you have to pay the money afterward? What are credit cards for?
Note to parents: To many kids, credit cards give the appearance that you can get something without paying. It’s important to explain that you do have to pay.
Why Can’t I Have My Own Credit Card?
Answer: It is against the law for children to have their own credit cards.
That’s because children don’t have regular jobs, and most children don’t have much money. How would they pay the bills without any money?
Children can have debit cards, though. Debit cards are just as easy to use as credit cards.
You can buy anything, anywhere, anytime. But the money comes right out of your bank account instead of a loan from the bank.
You never borrow any money because you spend only what is in your account.
You still need to be responsible and spend only the amount you planned to spend.
If you are responsible with your budget and your saving and spending, perhaps your parents will let you have a debit card.
Key verse: “Well done!” the king exclaimed. “You are a trustworthy servant. You have been faithful with the little I entrusted to you, so you will be governor of ten cities as your reward.” (Luke 19:17)
Related verses: Matthew 25:14-30; Luke 12:15; 1 John 2:15
Related questions: Why do you have to be a certain age to get a credit card? Why don’t my parents let me have a credit card?
Note to parents: Emphasize the tie between responsibility and privilege.
The person who can spend a little money wisely will be given more money to manage later.
You can encourage your child to handle money wisely by affirming and rewarding wise use his or her allowance.