What Happens If A Person Doesn’t Pay a Credit-Card Bill?

Answer: A person who doesn’t pay a credit card bill on time is charged interest.

Sometimes the bank will charge extra penalty fees too.

If someone goes for a long time without paying off a credit card bill, the small bill will turn into a huge one.

People who don’t pay anything on their credit-card bills get in big trouble with their bank.

Not paying credit-card bills goes on a person’s credit record. It shows that the person cannot be trusted with money.

That will hurt the person if he or she ever wants to get a loan from a bank.

It also displeases God. God wants us to always be honest and do what we say we are going to do.

When we don’t pay the bills we agreed to pay, we are being dishonest.

It is important that we borrow money only if we know we can pay it back.

 Key verse: The wicked borrow and never repay, but the godly are generous givers. (Psalm 37:21)

Related verses: Leviticus 19:13; Proverbs 22:3; Luke 16:10-13

Related questions: Why do you have to pay someone back if you borrow money?

Why is there a national debt- why don’t they just call it off?

Note to parents: Explain the difference between credit and debt. Credit is when someone is willing to lend you a certain amount of money.

Credit is good to have. It shows that others trust you. When we use credit for convenience and within our budget, it is a good thing.

Debt is when you owe money to someone else. Debt is not wrong, but it can cause problems and therefore should be avoided as much as possible.

Is It Wrong To Borrow Money?

Answer: It is not a sin to borrow money; it’s just not very smart. God gave rules to the Israelites for loaning money to each other, so obviously it was OK for them to do it.

You can find those rules in the Bible (Deuteronomy 15:1- 11; 23:19-20; 24:10-13).

Although it isn’t wrong, borrowing money is not the best thing to do.

Borrowing money from a bank will cost you interest charges.

Borrowing money from a friend may cost you a friendship.

That’s because you may forget or be unable to pay back your friend, and he or she may get mad.

Sometimes borrowing money is necessary, such as when someone wants to buy a house.

But a lot of people borrow in order to buy things they really don’t need.

If you really want something, try to save up for it first.

If you can’t save up for it, maybe you need to get along without it.

Key verse: A prudent person foresees the danger ahead and takes precautions; the simpleton goes blindly on and suffers the consequences. (Proverbs 22:3)

Related verses: Psalm 37:21; Proverbs 22:7; Matthew 6:19-21, 24-34

Note to parents: Be willing to give your children credit: If you are out together and they want to buy something but have not brought their spending money, buy it for them and have them pay you back when you get home.

But avoid lending them money against future income, since borrowing is a foolish habit to develop.

(Save the word wrong for issues such as lying and cheating. Borrowing is not wrong; it’s just not the ideal way to buy things.)

Why Do People Have To Pay Interest On Money They Borrow?

Answer: People have to pay interest only if they agree to do so when they borrow the money.

All credit cards come with a contract that tells exactly how much the user of the card has to pay.

When people borrow money from a bank, they sign an agreement that explains how much interest they will pay.

Banks charge interest on loans and credit cards because that’s how they make money.

Paying interest to a bank is like paying rent. You want to use the money for a while, so you pay the bank for that privilege.

When God gave the Law to the Israelites, he told them not to charge each other interest for loans.

Today many people will loan money to relatives and close friends without charging interest to help them in an emergency.

Key verses: If any of your Israelite relatives fall into poverty and cannot support themselves, support them as you would a resident foreigner and allow them to live with you.

Do not demand an advance or charge interest on the money you lend them.

Instead, show your fear of God by letting them live with you as your relatives.

Remember, do not charge your relatives interest on anything you lend them, whether money or food. (Leviticus 25:35-37)

 Related verses: Exodus 22:25; Deuteronomy 15:6; 23:19-20; Ezekiel 18:8

Related questions: Do you have to pay more money each time you don’t pay your credit card bill?

How come banks charge interest when you borrow money from them?

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.