Banking and usury

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So I work at a small community savings and loan. I know usury, the very act of charging interest, was prohibited in the Old Testament and the Church up until about the Renaissance. Why did this change, and how does the Church justify this change in teaching? I know it has been reinterpreted to mean charging excessive interest, or loan sharking.
 
Maybe this article will help.

The article concludes by saying…
In other words, Catholic teaching still holds that usury is morally impermissible, but it does not follow from this (and the Church never did teach) that any charge above principle on a loan is always wrong. The Catechism of the Catholic Church reiterates the condemnation of usurious actions:
The acceptance by human society of murderous famines, without efforts to remedy them, is a scandalous injustice and a grave offense. Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them. (CCC 2269)
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Let me know if this answers your questions.

God Bless
 
I was just offered a credit card.
At 28% interest.

I think that is usurious. But that’s my humble opinion.
 
Jimbo said:
I was just offered a credit card.
At 28% interest.

I think that is usurious. But that’s my humble opinion.
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How’s your credit? Because if you are such a risky lendee that that 28% accurately captures the risk, I don’t think I’d call it usurious. I think usury is relative to the level of risk involved.
 
728 last time I checked a couple weeks back.

Credit card companies need to be capped in terms of how much they can increase rates imho
 
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The Church defines usury like this:

Fifth Lateran Council
For, that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.
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The essence of usury is getting something for nothing and the other person getting nothing for something. It is an unjust transaction.

I think of it this way: an unjust transaction is essentially one where one party is made better off at the expense of the other party being made worse off. This is why the lender can charge interest for his risk, expense (including opportunity cost), and work, since these things make him worse off. He is entitled to at least “break even.” He can also charge interest for a loan that produces something, since the borrower is being made better off by the loan and the lender could have used what he loaned to produce something and make himself better off.
 
Even more so, credit cards need to go back to how they used to be, a luxury that you were only given if you could actually afford to pay them off.

I got my first credit card offer at 16, with no job, and no way to pay it back. I didn’t know the first thing about money, and left to my own devices would probably still be in debt as a result.

Thank God my parents were smarter than me, and my that my wife is better with money than i am.

The point is, credit card companies have long since become predatory. They take advantage of people, and have created billions in debt, people unable to move forward in life.

We need to get rid of them…
Credit cards are easy, I’ve never paid interest on a credit card statement. As long people pay them off in full at the end of the billing cycle it doesn’t matter what the interest rate is.
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They are easy to you. I also have never paid any interest due to my wife’s diligence. That doesn’t change the fact that hundreds of millions of people are in debt because of them, paralyzing debt in some cases.
 
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CCHcolonel said:
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ProdglArchitect:
That doesn’t change the fact that hundreds of millions of people are in debt because of them
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No one is in debt because of them. People are in debt because they make poor choices and spend more than they can afford.

The rare exception are those who suffer illness or some other act of God that is unforseeable. But the vast majority of people are in debt due to their own decisions.
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Perhaps I was unclear in what I meant. I want to be clear that I agree with you. Credit cards do not make people spend their money, and credit card companies are not explicitly responsible for a person being in debt.

My point is that, interest rates being what they are, once an average person finds themselves in any kind of moderate debt, it becomes almost impossible for them to pay that debt off. There are many, many cases where the monthly interest is more than the minimum payment. This means that if a person keeps making minimum payments expecting it to be helping them, they are actually getting further into debt without realizing it.

There’s also the disconnect that a credit card creates between payment and loss of money which makes it easier to spend more than you would operating under a cash system. That disconnect has led many people to accidentally fall into debt. True, they should be more aware of their spending, but you cannot simply ignore the role credit cards have to play in the problem.

I firmly believe that the world would be better off without credit cards, and I say that as someone who has never really suffered any ill impact as a result of them.
 
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Credit cards should only be used for conveience, and never as a method of borrowing money. They should be paid off at the end of each month. Nobody should be paying those interest rates. The best method is to just write a check for everything and stop buying if the account balance gets too low.
 
Even Wikipedia thinks that medievals did not allow any interest, because it was thought to be usury:

Christianity​


Christ drives the Usurers out of the Temple, a woodcut by Lucas Cranach the Elder in Passionary of Christ and Antichrist .[33]

The first of the scholastic Christian theologians, Saint Anselm of Canterbury, led the shift in thought that labeled charging interest the same as theft. Previously usury had been seen as a lack of charity.

St. Thomas Aquinas, the leading scholastic theologian of the Roman Catholic Church, argued charging of interest is wrong because it amounts to “double charging”, charging for both the thing and the use of the thing. Aquinas said this would be morally wrong in the same way as if one sold a bottle of wine, charged for the bottle of wine, and then charged for the person using the wine to actually drink it.[34] Similarly, one cannot charge for a piece of cake and for the eating of the piece of cake. Yet this, said Aquinas, is what usury does. Money is a medium of exchange, and is used up when it is spent. To charge for the money and for its use (by spending) is therefore to charge for the money twice. It is also to sell time since the usurer charges, in effect, for the time that the money is in the hands of the borrower. Time, however, is not a commodity for which anyone can charge. In condemning usury Aquinas was much influenced by the recently rediscovered philosophical writings of Aristotle and his desire to assimilate Greek philosophy with Christian theology. Aquinas argued that in the case of usury, as in other aspects of Christian revelation, Christian doctrine is reinforced by Aristotelian natural law rationalism. Aristotle’s argument is that interest is unnatural, since money, as a sterile element, cannot naturally reproduce itself. Thus, usury conflicts with natural law just as it offends Christian revelation: see Thought of Thomas Aquinas.

 
Loud-living-dogma said:
Even Wikipedia thinks that medievals did not allow any interest, because it was thought to be usury:
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You do realize that wikipedia isn’t actually an academic source, right? Wikipedia is a public repository than anyone can edit to say whatever they want. If you spend enough time on there you’re find almost every ill-conceived concept imaginable, as well as every counterpoint.
 
CCHcolonel said:
No one is in debt because of them. People are in debt because they make poor choices and spend more than they can afford.

The rare exception are those who suffer illness or some other act of God that is unforseeable. But the vast majority of people are in debt due to their own decisions.
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Not always. If I put on here how much total debt I had at the peak, most would be horrified. But it was always to make money; investments of one kind or another. I never borrowed to consume, except for my home, and I did borrow money for that.

Lots of people borrow in order to make money on investments they buy with that money.

I’ll add here than at more primitive times economies really were nearly “zero sum games”. If a farmer had to buy grain from his lord on credit, he had to pay it back out of no more grain than he had when he bought the first load. He wasn’t gaining any surplus, most of the time, and if the lord was, then it was a very unequal arrangement.

In biblical times, it would not likely have been any different for the most part. In modern times, borrowed money often pays back more than what was borrowed.
 
Loud-living-dogma said:
Aristotle’s argument is that interest is unnatural, since money, as a sterile element, cannot naturally reproduce itself. Thus, usury conflicts with natural law just as it offends Christian revelation
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The weak part in this is that money is not used by itself. It’s a tool, not a robot. Money and human industry work together to create income and wealth greater than the inherent value of either. A farmer with a tractor (capital) can raise a lot more grain than one who only has a grubbing hoe.

Machines are like extensions of our muscles. Money is like blood in our arteries. The blood can’t do anything good by itself, but when it feeds muscles, much is produced.
 
This is wrong, IMO. First, let me say that the Church needs to desperately clarify what is and is not usury in this day and age. It is a critical issue of social justice. Hillaire Belloc wrote a good essay on usury back in the 1920s. Now, he was not completely correct due to his misunderstanding of money, but he captured a couple of key points.
First of all, you must determine if a loan is a productive or non-productive loan. A productive loan is simply supplying capital for a business Enterprise. For a productive loan, usury does not come into play, as the two parties can come to an agreement with respect to the expected business profits and settle on payment terms.
A non-productive loan is what we would consider a consumer loan: ie credit card, car loan, home mortgage. Now Belloc held that any interest on these loans was usurous, and it is only our current capitalistic economy that makes it seem necessary. That is too far. The indeed, the modern existence of home mortgages has been a good thing to enable the common man to own property. The fact is that money does have a time value, and interest can be charged to accommodate this. Also, a reasonable profit for use of money can be charged. However, it is not legitimate to recover any and all risk via a higher interest rate. One can never violate the following rule:. Any interest rate which, in and of itself, places an undue burden of ever paying off a loan is usury. 28% is usury. Those loans cannot be justified by any level of risk.

There are lots of examples of usury built into our economy: pawn shops, payday loans, absurdly high rates on credit, etc. They always take advantage of the poor. The church needs to do better in it’s teaching on this very important subject.
 
I would agree with this. And the introductory rate getting jacked is ridiculous to me. I have one card that started at 13% and is now 24%. If I was in a situation where I had to use it that would suck. I don’t get rid of it because that reduces my rating.

I didn’t get a card until I was 25, because I wanted to pay my way. I had a job, good income, no debt, and few expenses.

But then I couldn’t get a car when I needed to because I had no credit. I couldn’t get credit because ‘I was a risk’. People with horrid credit got cards when I couldn’t.

The only way out was a family friend, who was a loan officer, signed off on the loan.

But yes, it appears to me the game is rigged to get people in debt and keep them there as much as possible.

I despise debt.

I’m not a socialist. I don’t mind a credit card per se. I don’t mind them making a decent, even tidy profit. But the variable rates, insane small print, and myriad ways you can hurt your credit rating have gone off the rails.

Just my opinion.
 
Agreed. But I think life happens more than you think.

In my case I had low income in '08, and a car that I needed requiring a major repair, while at the same time I had major expenses for the kids.

I was very irked to find out that my card had gone from 13-24% in a space of years where I didn’t use it much and when I did, always paid it off.

I consider it a point of honor to pay my debts. If I leant money out I would feel like a crook making an arrangement whereby I can jerk around the situation at my leisure to make more money.
 
CCHcolonel said:
All that would happen is poor people would have less access to credit in that case.
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I’m okay with that. We should find a better way to help out the poor than leaving them to credit rates like that where it is very difficult able to pay back what they borrow.
 
This is a key point. Everyone points out that the poor need the credit, yet the system requires an interest rate high to cover the risk. The poor gets screwed. A just society needs a better solution than usury.
 
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