How to Beat the Banks at the Credit Card Game

by : Steve Kroening

Here's a financial tip that's an answer to a letter I recently received. Debbie asks: "We've been battling credit cards for most of our married life. We're finally getting on top of the situation. We've paid off almost all of our cards with one left to go. It feels good! It makes me extremely angry to get two and three new offers of credit cards almost every day. I take great joy in tearing all of them up and throwing them away. The minimum payments have gone up. Interest rates are astronomical! Is there anyone who goes to bat for the consumer on credit cards or are the big banks just leading us to the slaughter? It appears that the banks can do about anything they want. Thanks!"

First of all, congratulations on your efforts to get out of debt. This has to be a major priority for all Christians. We are to be slaves to Christ, not to lenders.

Unfortunately, the banks have a lot of power to influence Congress, so they are able to do just about anything they want. Which means anyone who has credit card debt knows what Scripture is talking about when it says, "the borrower is servant to the lender."

You're doing the very best thing you can do to control the banks -- pay off the cards. And then stay out of debt. If you can't control your spending with credit cards, cut them up and stay away. Credit cards are a great tool if you know how to control them. Unfortunately, most people don't. Researchers say that the average person spends about 30% more when they use a credit card compared to using cash only. That's why radio talk-show host Dave Ramsey tells all his listeners to cut up their cards.

I think that's the best course of action for most people. Remember, the banks make money with credit cards three ways: interest charges, late payment and other user fees, and through merchant fees (fees charged to the companies that accept credit cards). The latter will often result in higher prices you pay for the things you buy. The first two, you have more control over.

If you decide to use credit cards, you must pay them off every month and use them only for items you would buy with cash. That means you have to stay within your budget. If you can do that, then credit cards are a good tool to use. But if you can't, then cut them up.