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Why Charging Interest makes Sense - Logically and Biblically

By Chris Horst of Hope International - A few weeks ago I met with a church group in Boulder, Colorado. One of the group members asked pointedly, “Why do you charge interest to the poor? Why not just offer interest-free loans or grants?” I started sharing a lengthy, detailed response when I was interrupted by another member of the group— “It’s not that complex,” she said, “It actually makes a lot of sense why they charge interest.”

She shared that when her practice first opened, decades ago, she provided free counsel to underprivileged women—single mothers, former inmates, etc. “They rarely showed up for our scheduled sessions. If they did show up, they kind of blew it off.” She went on to discuss why she now charges these at-risk clients. While she discounts her service significantly, she still charges a fee. The change, as she described it, has been remarkable. “Now these women value my services. They come on time, they are invested, and they soak up every minute of their sessions. It’s been a dramatic shift since I’ve started charging a fee.”

I smiled sheepishly and said, “Yes, thanks for your comment. That’s why we charge interest.” Her simple story from her counseling practice, and the clear personal conviction with which share shared, powerfully communicated what no amount of complex development theories, supportive statistics or quotes from field practitioners could. It just made sense.

Ok, so it works logically. But, as Christians, we are not always called to act logically. At times, we’re called to act contrary to what “makes sense” to everyone else. The Bible actually has a lot to say about this subject. Some of it, at first glance, actually has made me squirm. Exodus 22:25 says "If you lend money to one of my people among you who is needy, do not be like a moneylender, charge him no interest” (NIV). That feels fairly straightforward. It seems clear that we aren’t to charge interest to the poor. Upon first seeing that passage, I began wondering if working at HOPE was even biblically permissible!

The Hebrew word for moneylender, neh'-skek, as used in this passage, is also used in Nehemiah 5:7, when Nehemiah rebuked the wealthy in his community for taking advantage of the poor. “I pondered them in my mind and then accused the nobles and officials. I told them, "You are exacting usury from your own countrymen!” Here, it is translated as “extracting usury.” The word used in both of these verses, in Hebrew, literally means “to bite” or “to strike with the sting of a scorpion.”

I am by no means a biblical scholar. However, after doing some research, there seems to be fairly clear consensus that these, and other similar OT passages, are an indictment of usury and exploitative interest. The Bible is clear in its condemnation of profiting off the backs of the poor. And, make no mistake about it; God has a strong distaste towards charging exorbitant interest rates to those on the margins.

What HOPE is doing across the world, however, is trying to put moneylenders out of business. Whenever we start working in a new community, we undercut the loan sharks. While it is common for these loan sharks to charge 200 or 300% APR or more, HOPE is offering reasonable and transparent rates. HOPE’s rates are a breath of fresh air for the poor who have been trapped in poverty as a result of these moneylenders.

Through charging interest, HOPE has sustainable programs, which treat our clients as clients, not as needy recipients. They value the services we provide—because they experience the dignity of legitimate exchange and because the rates are clear and reasonable! We are bringing justice in the communities where we are working, as we seek to strip loan sharks of their clients. I believe, just as the psychologist from Boulder said, that charging interest to the poor “just makes sense”—logically and biblically.



Christ Horst is a regular contributor to the blog and is an active leader with HOPE International, one of the leading Christian Microfinance groups. Learn more at http://www.hopeinternational.org/.

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posted by Justin Forman | 7.20.2009 - 8:06 AM

2 Comments:

I grew up a very serious "Bible-believing" fundamentalist. And I joined Wall Street thirty years ago. But when contemplating seminary, I read Mere Christianity in which C.S. Lewis explains our modern world, and capitalism in particular, turned the ancient economic world on its head by charging interest. He did not conclude we are wrong or immoral to do so. After studying the subject, neither did I. I realized biblical people only made consumer loans while the modern world also makes productive loans, a nuance the Protestant Reformers made when legitimating interest. But I still had to confess I was an economic "liberal." In other words, interest is not always logical and is never biblical. It is however in harmony with long-standing Christian tradition. That realization made me uncomfortable for a while but eventually brought me peace over a topic that still bedevils many. It also helped me avoid theological gymnastics when I served as the board treasurer of Opportunity International, another micro-entprise ministry. Hope this blesses other Bible-loving Christians as much as it did this one.

Gary Moore
Founder, The Financial Seminary
Author of Faithful Finances 101
Garmoco@hotmail.com
commented by Anonymous Anonymous, 9:09 AM  

Perhaps another way to look at this would be from the perspective of stewardship. The lender will be required to give an account for the funds entrusted to him just as the servants had to give an account before the master in the parable of the talents. Combine that with the dictate of Luke 16 that you won't be trusted with true riches if you can't properly manage money, and it would seem that from a stewardship/resource management perspective you have no choice but to charge interest.
commented by Blogger dauzh, 10:40 AM  

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