Lesson 5

Credit Cards

With credit cards, you can be:


The risks of being exposed include:

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Never own car or home
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Getting sued by creditors.
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Paying hundreds in fees that could have gone towards ministry or saving.
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Having creditors calling relentlessly.
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Cunning Credit Card


It is something to be feared because it can literally destroy your life.


It is not necessarily bad because it can serve a useful purpose – within certain limits.

At its core, a credit card is a product.

  • But it is 2 products in-one, with one of its products being highly hidden, which makes it cunning and dangerous.

A Very Bad Lender

If you do not pay your credit card balance at the end of the month, you are now officially using your credit card as lender. Credit card companies are very bad lenders.


  • The Annual Percentage Rate (APR) is the interest charge that will be assessed on your outstanding credit balance. It is insanely high, ranging from 12-35%. To put that in perspective, I recently borrowed $500,000 to buy my home, and was assessed a fixed APR rate of 2.99% over 30 years.
  • Most APR rates are variable rates, which means they can change anytime, and love to go up.
  • If you have $6,000 credit card balance, APR of 15%, and paying $76 minimum monthly payment, it will take 29 years to pay off loan with

    $20,000+ of interest paid.

Minimum Payments

  • This is the lowest amount of money that is needed to keep your credit card product working.
    • Once we anchor our minds to the small minimum payment, say $15 a month, it is too shocking for our brains to then adjust to the larger full balance, like $2,000. So, we naturally avoid thinking about our full balance. This is why only quarter to a third of people actually pay off their full balance.

Default Rate

  • If you miss your monthly payment, you are considered in breach of your contract, and a new, much higher default interest rate (30%+) will be assessed on your outstanding balance.


  • In addition, if you miss your monthly balance, even for just one day, you will be charged a fee (usually $40-$60) on top of the higher default rate interest charge.

Spending Addiction

  • Credit cards may addict you to spending money:
    • Allow you to delay payment, which is a critical barrier to making a purchase.
    • Produce a reward sensation in your brain, which does not exist when using cash, and is a highly addicting feeling.
  • Studies show that you will spend 30% more when using cards vs. cash.

When to Cut Em' Up

I use my credit card as a medium of exchange.

I also like getting a few hundred dollars cash back every year.

However, I will cut up my credit card if: I am assessed a fee or interest charge MORE THAN 2 TIMES A YEAR.

If that happens, I am no longer responsible enough to have a credit card. The snake has bitten me too many times.

Every monthly credit card statement will have a ‘Interest Charged’ table showing whether you have paid interest. If it is not $0, then you are using your credit card as a lender.

Make all interest and fees charged is $0
If not, it is likely best to cut up your credit cards and switch to a debit card.

Credit Card Video

Good rewards?

  • Usually, it is a choice between cash back and travel points.

$0 Fraud Liability?

  • Most card have this: it ensures that you will not pay any money on unauthorized charges.

Purchase Protection?

  • Short-term insurance protection from theft or damage on recently purchased items (usually 90 days from purchase).

Favorable APR?

  • Lower is better, but this does not matter if you are not going to use it to borrow money.

Annual Fee?

  • The better the rewards, the more likely you will pay an annual fee.

Foreign Transaction Fee?

  • Much better to choose a card that will not charge this fee every time you use it outside of the U.S.


If you are unable to receive a credit card, consider the following 3 alternatives in order to qualify for a credit card:

  1. Open a SECURED CARD where you put money down and receive limited rewards while you show you are trustworthy with credit (i.e., pay your full balance each month).
  2. Become an authorized user of your parent’s credit card.
  3. Sign up for a credit builder loan. You pay back a loan into a savings account. Once loan is paid back, you have access to savings amount, which you can parlay into a secured credit card deposit.


Getting cash back from a credit card is a delightful experience. The money is often unexpected and unbudgeted.

It is usually fun to buy something fun with the money. But how fun it could be to be used by God to pass along this money to another person in need.

I personally have many stories of God placing someone in my path who needed the exact amount of money that I was prayerfully considering giving. It is a magical experience!


  1. The next time you get cash back from your credit card, consider this as something that is meant for another person.
  2. If you know that you will receive cash back sometime within the next couple of months, began to pray that the Holy Spirit will put someone in your path who needs that money.
  3. Be attentive to who may need the money and give as the Spirit leads!


Using credit cards may expose you to identity theft if someone gets your credit card number. How can you protect yourself from identity theft?

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