Dear Roger,
Is it OK to lend money with interest?
Patrick
Dear Patrick.
Yes, it is OK to loan money with interest. Jesus scolded the one-talent man in Matthew 25 for not putting Jesus’ money in the bank so it could at least earn interest.
The Old Testament allows charging interest as long as the interest is fair and not usurious. The Old Testament approximation is that anything over 2% is usurious.
I hope this helps.
Love, Roger
I gave Patrick a short answer; let me expound on my answer.
My Citibank MasterCard just arrived! New balance for this month: $31,721.34! I’m shocked! There must be some mistake!!!
Our monthly bill usually runs high. Mostly because we have a lot of reimbursables. Whenever we teach a conference we charge everything we can on our MasterCard; we want the air miles we can get. Expenses for four conferences and one retirement trip to Tucson with all the family during the last two months add up fast. Car rentals, hotel bills, airline tickets, meals, materials and gasoline can easily reach $15,000 during that time. The MasterCard bill also included a charge of $8500 for copies of my book, “Got Guts, Get Glory” and Julie’s book, “Bored in Big Church,” which we intended to sell at our retirement party.
But $31,000! That’s outrageous. Surely the good folks at MasterCard made a mistake and I went looking for it.
Uh oh, my mistake! I forgot to pay last month’s bill. I couldn’t believe it. I have not missed a payment—ever—in the 30 years I have used that particular card. Current charge of $14K plus $17K from last month adds up to $31K. Subtract out $23K worth of reimbursables and things looked much more normal.
For the first time I bothered to read the fine print on my MC bill:
Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay of late fee of up to $35 and your APRs may be increased up to the variable Penalty APR of 20,99%.
Minimum Payment Warning: if you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example: if you make no additional charges using this card and each month you pay only the minimum payment, you will pay off the balance shown on this statement in about 35 years.
Do you want to know what’s sad? When we teach Biblically-based-financial seminars at church we always ask, “How many of you have charge card bills of $30,000 or more?” about 50% of the hands go up! It never ceases to amaze me. No wonder these people have trouble tithing—and have come to the conference for help.
By the way, it’s OK to use a charge card as long as you pay off the entire bill at the end of the month. Although people who used charge cards will on the average spend 30% more than those who take the trouble to pay with cash. The first month you cannot, (or don’t want to), pay off the entire balance you’ve taken the first step toward financial bondage. You’ve got a problem.
According to the Bible, charging interest, or paying a fair amount of interest is all right. The issue of paying interest becomes a problem when usury is involved. Usury is the practice of charging excessive, unreasonably high, and often illegal interest rates on loans.
Let’s look at some of the Biblical material and then try to define usury. Is 20.99% usury? It certainly seems so. How do we know for sure?
According to the Bible, when someone in your family or immediate circle of friends needs money, lend it and charge no interest. He/she is still responsible to repay the loan.
If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest (Exodus 22:25-27).
If one of your brethren becomes poor, and falls into poverty among you, then you shall help him … Take no usury or interest from him; but fear your God, that your brother may live with you. You shall not lend him your money for usury, nor lend him your food at a profit (Leviticus 25:35-37).
According to the Bible, charging interest in business deals and to those outside your immediate circle of friends is approved by God.
To a foreigner you may charge interest, but to your brother you shall not charge interest, that the LORD your God may bless you in all to which you set your hand in the land which you are entering to possess (Deuteronomy 23:19-20).
God condemns in the harshest terms those who engage in usury.
If he has exacted usury Or taken increase—Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him (Ezekiel 18:13).
Obviously, if you are to be in the money business, it is better to own than to owe. It is better to be the loaner. God gave a promise to Israel that if they followed His laws and principles then:
… the LORD will open the heavens, the storehouse of his bounty, to send rain on your land in season and to bless all the work of your hands. You will lend to many nations but will borrow from none. The LORD will make you the head, not the tail. If you pay attention to the commands of the LORD your God that I give you this day and carefully follow them, you will always be at the top, never at the bottom (Deuteronomy 28:12-14).
Of course, God went on to say that if they refused or neglected to follow His principles then the situation above would be reversed.
By the way, according to Solomon any one who co-signs a note for another is a fool.
He who puts up security for another will surely suffer,
but whoever refuses to strike hands in pledge is safe (Proverb 11:15).
A man lacking in judgment strikes hands in pledge
and puts up security for his neighbor (Proverb 17:18).
I think that it’s significant that Jesus put His stamp of approval on lending money at interest. He did it in the form of a parable about an owner (Himself) who left money to three managers (His followers) and encouraged them to manage well until He returned (The Second Coming). Two managed well and were given even more to invest. One hid the money. Jesus told him that if was afraid to take an investment risk, then the least he could’ve done was to put it with the bankers and earned some interest: “Why then did you not put my money in the bank, that at my coming I might have collected it with interest?” (Luke 19:11-26).
Before we define usury, we need to remember what loaning and borrowing will be like when the Kingdom of God comes on earth:
And if you lend to those from whom you expect repayment, what credit is that to you? Even ‘sinners’ lend to ‘sinners,’ expecting to be repaid in full. But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the ungrateful and wicked. Be merciful, just as your Father is merciful (Luke 6:34-36).
While it is OK to borrow money at interest, Paul reminds us that it is best not to borrow in the first place: (Owe no man any thing, but to love one another (Romans 13:8).
So, how much is usury? All of us would agree that the annual MasterCard rate of 20.99% is sin—I mean usurious.
But, does the Bible give any insight to a definite percentage? I think so. I attended a Biblical economics seminar during my last year in college. The conference helped me develop a Biblical financial plan that has served my family well for over 40 years. Of the many things I learned, two things stand out.
First, God’s economic plan rests on four pillars: (1) paying God His 10% right off the top of total earnings (before withholding taxes); (2) paying the government its share; (3) utilizing a budget to help guarantee that I spend less than I make every month; and (4) having a surplus each month in order to be able to help the poor.
Second, the Bible defines usury as anything more than 2%.The conference teacher used a number of passages dealing with the variety of tithes in the Old Testament; the 50-year Jubilee for canceling all debts; as well as a variety of texts dealing with borrowing and paying interest and showed us the Bible figure of 2%. I have never tried to verify his 2% figure. I just trusted that he knew what he was talking about. Since everything else he taught seems verified by my own experience, I will take his word for it (By the way, I couldn’t repeat his calculations if my life depended on it: but, then, again, he was a brilliant, trustworthy man.)
So, I answered Patrick with a figure of 2%.
The next day he sent me the following email:
Dear Roger,
Regarding your answer, I’m still not certain what would be considered usurious since 2% would be considered a very low rate nowadays. I think that as long as the interest charged is not causing hardship on the borrower, or is considered an extravagant amount, it would be o.k. Would I be right in thinking this way?
Sincerely,
Patrick
Patrick’s answer sure sounds good to me in our current economic system. I hurriedly emailed, “Yes”, right back.
