Millennials and Credit – One Personal Perspective

By Timothy Siburg

You have seen the numbers and the data. Marcia Shetler did a nice job of summarizing the reality about millennials and credit. I think it would be fair to say that millennials are apprehensive and anxious when it comes to credit cards. As a millennial myself, I get the sentiment, I do. It can be easy to be afraid, and caught by those fears of money, scarcity, security, and the feeling of not having enough. But as time has gone on, my wife Allison and I have found ways to deal with credit cards effectively for our finances and needs.

Like most millennials, we have debit cards. But perhaps surprisingly unlike many, we have a credit card too. We didn’t take this on without some serious thought, though. My parents’ advice has always been, “A credit card is a tool. Don’t misuse it, and pay it off every month, and you’ll be fine.” I have found that advice to be sound and helpful.

To translate, make sure you don’t carry a balance on a credit card, because if you do, that’s when the interest and the amount you owe can spiral. I think that’s where the fears of many millennials come in. We already have plenty of big interest payments we make each month on student loans, so the last thing we want to do is to create another such financial burden or challenge to overcome.

You might remember that Allison and I often budget over pancake breakfasts. We still do this, though perhaps it’s been a bit more sporadic lately. But when we do this, we include an update on all of our accounts, what it will take to pay off any credit card balance that month, and our plan of action.

I’ll admit, there have been months when those credit card payments are a bit higher than I might like. Just because you have the card doesn’t mean you get to put off budgeting, spending within your means, and saving responsibly. I view a credit card as a tool to make the most of the spending that my wife and I already need to do.

One of the biggest things that we enjoy from our credit card are airline miles. Being half a country away from most of our extended families means we travel a lot. Having air miles to use towards those flights and trips can be a big help in bringing down airline ticket costs. Besides, if we were going to spend that money anyway, we might as well get some additional benefits from those purchases.

In terms of what we purchase with our credit card, we usually use it towards big expenses and online purchases. This might mean a recent car repair bill I had to pay, or as new parents very soon, we have been stocking up on baby essentials, and ordering all of the fun baby furniture online. Using a credit card for online purchases can potentially help give a little extra security.

Friends we know use their credit card faithfully on regular purchases like filling up their gas tank, or buying groceries. They do so because they have developed a system with their family budget, of paying off that credit card weekly while receiving some extra benefits from those purchases. That system hasn’t quite worked for us, but I have seen it work for them.

If credit cards are used wisely as a tool, they can help build up your credit score over time by proving that you are reliable with your finances, and making timely payments. This might prove helpful down the road, when considering a bigger purchase like a new home or car, or when stepping into a new chapter of life like moving to a new state and/or growing as a family.

In terms of faith, one of the things that I enjoy most about having a credit card, is that it gives me a little piece of mind when giving to my church and other causes that matter to me—online. It’s quick and easy to use. These are offerings and donations that we would make anyway, and there’s a little bit of freedom to be able to do these from the comfort of our own home, and see the transaction credited within moments.

These have been things that we have found to be helpful. This advice might not work for you, and I am certainly not a financial expert. For us, having one primary credit card, and debit cards has been the right approach for living faithfully with our finances, and stewarding them. We’ll see how this approach might change once Baby Siburg arrives.

About the Author: Timothy Siburg is the Director for Stewardship of the Nebraska Synod of the Evangelical Lutheran Church in America (ELCA), a Deacon in the ELCA, and is a member of the COMPASS Steering Committee. His wife Allison serves as an ELCA pastor, and together with their cat Buddy, they reside in the greater Omaha area and are expecting their first child. Timothy attended college at Pacific Lutheran University, and graduate school at the Claremont Graduate University and Luther Seminary. Timothy can also be found on TwitterFacebook, and on his blog.

A High Score Can Help You: Responsible Credit Decisions Now Can Pay Off Later

By Denise Reinoso Wayman

Do I have credit? Why does credit matter? What is a credit score? Should I apply for as much credit as I can get? You may have asked yourself these questions.

A credit score evaluates a consumer’s creditworthiness. Lenders use credit scores to gauge how likely someone is to repay debts. Someone with a higher score is considered more financially trustworthy.

Lenders generally offer lower interest rates to borrowers with high credit scores. If you have a low credit score, you may not qualify for certain loans or have to pay higher interest rates, which increases your cost of borrowing. If you have no credit score, that usually means you haven’t established credit yet.

Establishing credit usually means borrowing money (using a credit card or getting a loan) and making your payments on time.

Missing payments can lower your credit score, so be realistic about how card or loan payments fit into your overall budget. It takes time to rebuild your credit score after it declines.

Credit_Reporting_AgenciesCredit is not a taboo topic. You may need a loan someday to further your education or buy a car or house. Wouldn’t it be great to be offered the best rate possible? Here are a few tips:

  • Apply for only credit you need – be smart about what you’re doing and why.
  • Be responsible with the credit you have.
  • Make your payments on time.
  • Keep a low credit card balance and pay it in full monthly.

Start by setting up a relationship with your primary financial institution – manage your accounts responsibly, and there’s no better place to start establishing your credit.

You’re entitled to some free information

AnnualCreditReport.com is the official, authorized website to get free credit reports form the three major reporting agencies – Equifax, Experian and TransUnion.

Visit annualcreditreport.com/index.action for more information. It’s important to know what’s on your credit report.

If you have questions about credit or if you’re wondering about planning for your financial future, we would be happy to talk to you!

About the Author

Denise Reinoso Wayman is Regional Operations Manager for Everence Federal Credit Union. She works from their office in Mount Joy, Pennsylvania.

*The logos of Equifax, Experian, and Transunion belong to their respective companies and do not imply their endorsement of the Ecumenical Stewardship Center or its programs

Christianity and Credit

By Joe Tolton

As a Millennial saddled with a massive amount of student loan debt, I find relief just thinking about the Jubilee year described in Deuteronomy 15. What a hopeful concept! All of our debt could be wiped away after just seven years. The Jubilee year among the Israelites had merit. Jubilee years kept the disparity in society from getting too great. This helped people to bond and kept the society from breaking down into those who had money and those who owed the money. Inequalities in the distribution of wealth were not so much that forgiveness of the debt would be too costly for anyone. Lenders were to use a zero-interest system either for the poor (Leviticus 25:35-37, Exodus 22:25) or for all of the people in the country (Leviticus 25:35-37, Deuteronomy 23:19-20, Ezekiel 22:12).

The scripture verses here and in other places acknowledge that a burden of debt can become spiritually and emotionally debilitating, not just a practical aspect of life. The caution of Proverbs 22:7 is that a borrower becomes a slave to the lender.

debt-1376061_640We have moved away from the kind of society that would have considered a Jubilee year to one where the poor are disregarded and preyed upon. Our whole society is taking a more predatory approach to finance on all levels. There is a larger disparity between those who lend and those who borrow than ever before. This is the sort of time in the Bible when the great prophets arise.

The financial industry now depends on debt to survive. The divide between the haves and have nots of this world has become wider and less likely to be bridged . Money has become equated with power, skewing our decision making from practical solutions that offer compassion and grace, to ideas that make sense just for those who earn the most money in the economy today. Those who can afford to lend the money end up making most of the decisions, including the health and welfare decisions of the poorest of the poor and the sickest of the sick in our society. It skews our government, and taints our way of thinking as a society.

Individually debt becomes a guilt-ridden area for many, and, for most, a source of shame. Personal debt can pile up pretty quickly: not just student loans, but car loans, home loans, and payday loans. Credit cards, a form of short-term loan called revolving credit, can be worst of all.

Jesus cautions us to plan for the future and count well the cost of what we are about to do. In Luke 14, Jesus compares looking to the future to planning to build a tower, making sure you budget for all of the levels of the building project. He also talked about the prudence of the king considering the consequences of going to war. Sometimes in the worst financial situations, we may not get our dreams fulfilled.  We may have to negotiate and settle for less. While living without regard to our debts may make us think we are living more freely, the costs of it are more harmful than interest rates and credit scores show.

There is a spiritual reason that Psalm 37 calls us to repay our loans and that Proverbs 22:26-27 and Romans 13:8 caution against getting ourselves in debt. As Christians, we need to do our best to live up to our word, but also offer ourselves the grace that God has given us. As Christians in a society we need to work for better practices when it comes to debt and debt collection.

About the Author 

Joseph Tolton is the Office Manager of the Ecumenical Stewardship Center. He serves as co-pastor of West Elkton Friends Meeting of West Elkton, Ohio and is an ordained minister through the South/Central Indiana District of the Church of the Brethren. He holds a Master of Divinity from Bethany Theological Seminary and a BA in Communication from Hope College of Holland, MI.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS Initiative to engage young adults in conversations about faith and finances. Like what you see and want to know/do more? Visit the COMPASS web page, follow us on Twitter, and join the COMPASS community on Facebook.

Millennials: Should We Give You Credit?

-Marcia Shetler

There’s a lot of talk about millennial debt in the media, and there’s a lot of millennial debt to talk about. About a year ago, Business Insider reported that US millennials held about a third of the country’s consumer debt. Fourteen percent of Canadians with significant debt are between the ages of 18 and 29.

pexels-photo-462368.jpegIn the US, millennials’ experiences with finances and debt have influenced their thoughts about credit. They observed their families’ struggles during the 2008 financial crisis. Many of them have considerable debt from student loans and have not been able to find jobs that help them repay it quickly. And in the US, the 2009 CARD act has made qualifying for credit cards more difficult. Therefore, US millennials are approaching credit differently than previous generations. Less than a third of them have a credit card. In Canada, 95 percent of Canadian Millennials have at least one.

Millennials also have more methods for money exchange available than ever before. In the US, 58 percent still prefer to get paid with cash, according to shopify.com. Many still write checks occasionally. Most of those who don’t use credit cards use debit cards. Across North America, payment apps are becoming more popular.

But with vast amounts of knowledge and experiences accessible to them, millennials on both sides of the border have poor financial literacy. Only eight percent in each country have a high knowledge about money matters, including credit. This lack of understanding—along with high debt, little savings, and being at the low end of the pay scale—makes the financial world a fearful one for many millennials. In fact, 33 percent of US millennials named credit card debt as the scariest aspect of their everyday lives.

People fear what they don’t understand and what they can’t conquer. This month, the COMPASS Initiative gives you several opportuntites to conquer your fears about credit by increasing your understanding:

  • Get great insights every week on this blog and on our Twitter feed and Facebook page.
  • Join us for a Live Chat with Denise Wayman, regional operations manager for Everence, on Thursday, March 29, 2:00 p.m. Eastern time, 1:00 p.m. Central time, Noon Mountain time, and 11:00 a.m. Pacific time.

So join us, and take some credit for reducing your fear and increasing your understanding about your finances!

About the Author 

Marcia Shetler is Executive Director/CEO of the Ecumenical Stewardship Center. She holds an MA in philanthropy and development from St. Mary’s University of Minnesota, a BS in business administration from Indiana Wesleyan University, and a Bible certificate from Eastern Mennonite University. She formerly served as administrative staff in two middle judicatories of the Church of the Brethren, and as director of communications and public relations for Bethany Theological Seminary in Richmond, Indiana, an administrative faculty position. Marcia’s vocational, spiritual, and family experiences have shaped her vision and passion for faithful stewardship ministry that recognizes and celebrates the diversity of Christ’s church and the common call to all disciples to the sacred practice of stewardship. She enjoys connecting, inspiring, and equipping Christian steward leaders to transform church communities.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS Initiative to engage young adults in conversations about faith and finances. Like what you see and want to know/do more? Visit the COMPASS web page, follow us on Twitter, and join the COMPASS community on Facebook.