Credit Card Concerns

by PRASHER, G. | Category: Focus | Sept 2007

In many countries the credit card has become a convenient means of payment and is daily used for millions of business transactions. Prompt monthly repayment of the full amount credited is of course the ideal use of the card.

However, problems may arise if repayment is unduly deferred. For the credit card is a type of unsecured debt, leaving the lender with no asset which could be claimed if repayment is not made. The term 'consumer debt' is often used to classify this type of indebtedness which originated in the United States about 1950 and developed in European countries during the past quarter-century. It has brought about a radical change from a financial world in which it was quite difficult for low wage earners to secure credit to a world where it's relatively easy.

The extent of this consumer credit development in Britain is illustrated by official statistics for the year 2005. In that year Britain's unsecured loans totalled �215 billion. This was more than a third of the �600 billion for continental Europe as a whole. (By comparison France took out �96 billion and Germany �60 billion). The British total means that on average each Briton owes �3175 compared with only �1588 owed by other Europeans. Britons between the ages of 18 and 24 owed an average of �2860 in unsecured borrowing; many in that age group had credit card debts of �5000 or more.

Two years ago the Governor of the Bank of England warned against building up high levels of personal debt during the consumer boom. His foresight was confirmed by developments in 2006. During the first quarter of 2006 there were 26,000 personal bankruptcies, a 66% increase compared with the same period in 2005. When the Bank of England increased interest rates to 4.75% in August 2006 this further added to the pressure on those already overstretched by credit card liabilities. It resulted in a �311 million fall in credit card lending, the biggest fall since records began in 1993. The big banks also began to clamp down on consumer credit. One bank undertook a comprehensive review of overdrafts after a reported 36% increase in bad debts among its personal customers.

There have, of course, been borrowers and lenders in all generations. In three of His parables, the Lord Jesus drew illustrations which required the awareness of His audience to matters of debt and repayment. The parable of the unforgiving servant (Mat.18:21-35) was in response to Peter's question, �"Lord, how often shall my brother sin against me, and I forgive him? Up to seven times?"� How surprised Peter must have been when the Master responded, �"I do not say to you, up to seven times, but up to seventy times seven."� In conclusion the Lord said, �"So My heavenly Father also will do to you if each of you, from his heart, does not forgive his brother his trespasses"� (verse 35).

It was while He was having a meal in Simon the Pharisee's house that a sinner woman �brought an alabaster flask of fragrant oil, and stood at His feet behind Him weeping; and she began to wash His feet with her tears, and wiped them with the hair of her head; and she kissed His feet and anointed them with the fragrant oil�. The Pharisee critically reasoned in his heart that if Jesus was a prophet He would have known what kind of person was touching Him, for she was known to be of ill repute. Knowing his thoughts, Jesus told Simon a short parable: �There was a certain creditor who had two debtors. One owed five hundred denarii, and the other fifty. And when they had nothing with which to repay, he freely forgave them both. Tell me, therefore, which of them will love him more?� The Pharisee replied, �I suppose the one whom he forgave more�. The Master drove home His message to Simon by saying, �her sins which are many, are forgiven, for she loved much. But to whom little is forgiven, the same loves little. To the woman He added: Your faith has saved you. Go in peace.�

Again in the parable of the unjust steward (Luke 16:1-13), the story centred on matters of debt and accountability for repayment, from which the Lord emphasized that, �"No servant can serve two masters; for either he will hate the one and love the other, or else he will be loyal to the one and despise the other. You cannot serve God and mammon."�

PRASHER, G. | Sept 2007
Focus