Is charging interest Christian?

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There is a bank in my town that is proud to be owned and operated by Roman Catholics. However, they charge interest on loans to fellow catholics. This is not a complaint, because banking is a profession and charging interest is how they earn profits. I know our Muslim counterparts forbid muslims from “usury” or excessive interest rates and was wondering what the catholic stance is on this issue.

Thanks!
Ben

pax et bonum
 
kafka said:
There is a bank in my town that is proud to be owned and operated by Roman Catholics. However, they charge interest on loans to fellow catholics. This is not a complaint, because banking is a profession and charging interest is how they earn profits. I know our Muslim counterparts forbid muslims from “usury” or excessive interest rates and was wondering what the catholic stance is on this issue.

Thanks!
Ben

pax et bonum
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What’s the issue? Being in business and making money in an ethical manner is acceptable.
 
kafka said:
There is a bank in my town that is proud to be owned and operated by Roman Catholics. However, they charge interest on loans to fellow catholics. This is not a complaint, because banking is a profession and charging interest is how they earn profits. I know our Muslim counterparts forbid muslims from “usury” or excessive interest rates and was wondering what the catholic stance is on this issue.

Thanks!
Ben

pax et bonum
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It is a sin when the interest rates are excessive.

This reminds me of a story I heard where some news agency was researching the interest rates of local pay-day loan offices and they found out the local mafia charged lower rates. :eek:
 
Catholic_Dude said:
It is a sin when the interest rates are excessive.

This reminds me of a story I heard where some news agency was researching the interest rates of local pay-day loan offices and they found out the local mafia charged lower rates. :eek:
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Yes, but I bet the mafia is more persuasive in getting the money they’re owed. 😉
 
Dispector said:
Yes, but I bet the mafia is more persuasive in getting the money they’re owed. 😉
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This day and age the “legal” pay-day lenders can hurt you just as bad, if not worse, in terms of long term credit-history effects.
 
When exactly did the definition of usury change? Certainly throughout most of Church history all interest whatsoever was definitely considered usury and banned for Christians (thus the Jewish bankers in Europe). This prohibition seems to have just faded away sometime in the early modern period, does anyone know why or when? Was this a Protestant issue?
 
kafka said:
This is not a complaint, because banking is a profession and charging interest is how they earn profits.
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You could also say that prostitution is a profession (the world’s oldest!) and charging for sex is how they earn profits… but does that make it ok? Does the CCC or any recent encyclical mention interest? I’m not necessarily against interest (I like my savings account!), but I do feel a bit nervous that our entire economic system is based on something that the Church vociferously condemned for 1600+ years… I guess I feel ambivalent/confused when it comes to usury/interest. 🤷
 
In the past, money was considered a non-productive commodity. There were few if any ways to make it “work” for you. Thus it was considered sinful to charge excess rent for something which was not earning anything for the user.

Today, money is a productive commodity. You expect to invest it for a good return. I have heard the saying: “There are only two sources of income: people working and money working.” So if money is going to earn something for the borrower, then it’s fair for the lender to charge a fair rent for its use.
 
JimG said:
In the past, money was considered a non-productive commodity. There were few if any ways to make it “work” for you. Thus it was considered sinful to charge excess rent for something which was not earning anything for the user.

Today, money is a productive commodity. You expect to invest it for a good return. I have heard the saying: “There are only two sources of income: people working and money working.” So if money is going to earn something for the borrower, then it’s fair for the lender to charge a fair rent for its use.
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I’ve heard that argument before (in fuller form), and I don’t really buy it. Jesus’ parable of the talents shows that money was expected to “produce” more money even in ancient times. The master in the parable is angry that his servant didn’t “at least” put his gold “on deposit with the bankers” to earn interest. Doesn’t sound like a society that saw money as barren to me.
 
What happened was a complete transformation of economic systems. Usury was once defined as charging any interest on a loan. But this definition was only applicable to the economic system in existence in that period. At that time, the general populace mostly traded goods in kind rather than being a total currency system like we have now.

I wonder if the definition of usury as ANY interest charges wasn’t really a disciplinary decision based on the (probably accurate) judgement that in a world where only the wealthy had any training in math and reading, toleration of interest charges would inevitably lead to worse oppression of the poor by the rich.

You don’t hear much about usury in official church teaching in the last several centuries, possibly because nobody is quite sure where the line between mutually beneficial interest (conventional mortgages being an example) and usury (payday loans being an example) lies anymore.

Interesting fact though: Christian prohibitions on usury made economic survival (prosperity even) possible for jews in christendom when bigotry and hatred might otherwise have destroyed them as a people. Since they weren’t christians, they usually WERE allowed to charge interest and thus, most every larger community had financing available when needed.
 
I believe if you study the Biblical laws on usury in context you will discover that usury was forbidden on loans to poor Christians. In other words, no interest could be charged on a loan given to desitute Christian brother, although collateral could be required. The idea was to help a poor brother in a temporary, desperate situtation to get back on his feet. You could not profit from his misforture. Interest on business loans and personal loans [although Christians are to avoid debt] was not forbidden. Neither does the Bible set a maximum interest rate. Whatever the two parties freely agreed to was acceptable.
 
dacoobob said:
I’ve heard that argument before (in fuller form), and I don’t really buy it. Jesus’ parable of the talents shows that money was expected to “produce” more money even in ancient times. The master in the parable is angry that his servant didn’t “at least” put his gold “on deposit with the bankers” to earn interest. Doesn’t sound like a society that saw money as barren to me.
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So then Jesus apparently saw nothing wrong with expecting a return on investment.
 
Check these references:

Belloc, Hilaire. “On Usury.” Essays of a Catholic. Rockford, IL: Tan Books and Publishers, Inc., 1993, 15-28.

Brown, Raymond E., S.S., Joseph A. Fitzmeyer, S.J., and Roland E. Murphy, O.Carm., eds. The New Jerome Biblical Commentary. Englewood Cliffs, NJ: Prentice-Hall, Inc., 1990.

De Solenni, Mario. “Usury: The Rise and Fall of a Moral Idea.” Triumph (December 1971): 24-27.

___ “Interest.” In New Catholic Encyclopedia, vol. 7. Washington D.C.: The Catholic University of America, 1967; New York: McGraw-Hill Book Co., 568-569.

___ “Usury.” In New Catholic Encyclopedia, vol. 14. Washington D.C.: The Catholic University of America, 1967; New York: McGraw-Hill Book Co., 498-500.

From the bibliography of a paper by:

Father Gary L Coulter, Mount Saint Mary’s Seminary, Emmitsburg, Maryland, “The Church and Usury: Error, Change or Development?” A Research Paper Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Arts in Theology, Submitted August 15, 1999.

Someone provided a link to it with in the past two weeks on the forums. Try a search on Usury. It provided some decent information, but I didn’t save the link. Sorry.
 
I don’t think charging interest is sinful per se.

Eg at a minimum, due to inflation, $100 borrowed today is worth much less in a year’s time. So, by not charging any interest, the lender is actually losing money (even before we start talking about making money from interest).

Moreover, in order to lend money, the bank needs to have the money in the first place. Depositers expect interest/returns. Therefore, the interest needs to be recovered from borrowers.

It would seem sinful to charge excessive interests. However, in this day and age, if the bank was charging excessive interest, people wouldn’t be borrowing from them anyway – there are many other banks/financial institutions offering loans…. Unless the borrower has reasons for banks not to lend them money and need to borrow from unscrupulous illegal sources.
 
Why would anybody be in business and stay afloat if they didn’t charge interest? The Central Bank of your country sets the interest rate for a reason.

Also, for tax purposes, if you lend someone money, you basically HAVE to charge them interest. Usually 2 below prime is considered applicable in the Canadian Income Tax Act. The lender reports the interest earned and the borrower may deduct this interest if it has gone towards an investment etc…

It would be foolish to not charge interest.

I agree that excessive rates are sinful though. Places like moneymart, Money Tree and Payday loan, etc… should be outlawed in my opinion. They harp on the low income and are as good as loan sharks!
 
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