Is credit evil? The Bible states in Proverbs 22:7 “The rich rule over the poor, and the borrower is slave to the lender.” Personal Finance radio host Dave Ramsey tells his callers to avoid all debt except mortgage loans. Over 40% of American households have credit card debt. Total car loan debt in America is now $1.2 trillion! As a result of these sobering facts, is using credit bad for society? Should we shun it completely? Or does it have any redeeming qualities? Let’s see.
Is Credit Evil?
No, I believe credit is not evil.
Credit is a tool. Which, if one wields it inappropriately, causes harm to oneself or others.
I think of credit, be it credit cards or a mortgage loan, like a knife. Knives are great tools because we can use them to cut things or for defense. However, one can use a knife for evil by cutting or stabbing someone. If that happens, do we blame the person using the knife for evil, or the knife itself? It’s the former. The same can be said of credit.
Yes, there are bad lenders out there. They manipulate people to take on more debt than they can afford. Or they charge very high interest rates because they legally can. Some even make the terms of their credit applications difficult to understand. Again, we must blame these lenders for using credit in an evil way instead of the product.
Plus, without the availability of credit, many people couldn’t get a mortgage to buy a house or get a car loan to buy a car. Credit is vital in this world, and instead of fearing it, we all should learn how to use it properly.
I understand there are some people in the world who shun credit entirely. After taking on debt, the feelings of hopelessness and despair weighed them down. Some are able to pay it off, and then vow to never use debt again. While others can’t get out of debt, but still vow to never use it again.
As a result, those individuals preach about the evils of credit and persuade other people not to use it. And they sway those who never used any type of credit to not use it. Granted, some of those individuals may know themselves well enough that they wouldn’t be able to use credit wisely.
So How Can We Change Credit’s Reputation?
I believe the best way to change credit’s reputation is through education.
It’s well-known most Americans aren’t taught about personal finance in school. Some may learn about it from their parents, but a good portion do not. Finally, some are taught about money, but how to misuse it, along with credit.
However, if the schools won’t teach personal finance in class, each individual must take it upon himself or herself to learn. Yet, that task isn’t difficult today because we have vast amounts of information available online. One can visit NerdWallet to learn the basics about personal finance. Or if a person wants to learn how to invest in the stock market or in their retirement account, Investopedia teaches just that. Finally, if you want to learn about interest rates, and even compare some depending on the product, Bankrate is a great website for that.
Now, if you learn through visual methods, YouTube is your friend. There are plenty of personal finance videos you can watch and learn from. However, if you’re not sure who to trust, here’s a quick list:
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