The Biblical implications of charging interest -- Habitat for Humanity Int'l 1

The Biblical implications of charging interest

By Paul Hamalian

What does the Bible say about interest?


“If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest” (Exodus 22:25). Historically, Habitat for Humanity has used this verse as its basis for not charging interest.

First, it is important to develop a contextual understanding of the meaning of the word “interest.” In the ancient Near East, it was typical to charge excessive interest, or “usury.” The English word “interest” used in Exodus 22:25 is translated from the noun form of the Hebrew word neh’-shek, which comes from the root word nsk, meaning “to bite.” This creates a vivid image of the vicious nature of money lending at that time. This same word is alternatively translated as “usury” by many scholars to more accurately capture its core meaning. Therefore, we can conclude interest in these contexts refers to the concept of usury or excessive interest.

Secondly, the laws prohibiting interest were given to the nation of Israel through Moses within the context of their unique covenant relationship with God. More than a thousand years later Christ initiated a new covenant between God and all people who recognize his son, Jesus Christ. We, as followers of Christ today, are participants in this new covenant. We are not obligated to follow all the cultural laws of the old covenant with the nation of Israel. For example, the law against interest is among a list of other cultural laws that Christians do not follow today such as, “You shall not allow a sorceress to live” (Exodus 22:18) or “Whoever sacrifices to a god other than the LORD must be destroyed” (Exodus 22:20). Based on the common biblical understanding of the new covenant established by Christ, we can conclude these Old Testament passages do not prohibit Christian organizations from charging interest.

Rather than discard the prohibition of interest as only being applicable to ancient Israel, Habitat should follow Christ’s example by seeking to demonstrate the true spirit of these laws. The precedent for this comes from Jesus’ teachings in the Sermon on the Mount (Matthew 5-7), where Jesus says, “I have not come to abolish the law, but to fulfill it.” He goes on to interpret the full meaning of several of the Old Testament laws. Unfortunately, we do not have any direct teaching from Christ regarding the charging of interest. In the case of the laws prohibiting interest (usury), I propose that the spirit of the laws prohibiting interest is, “do not charge excessive interest when you loan money to the poor.”

We can conclude that Habitat can charge interest to the poor, but should avoid excessive interest. However, there is a more profound teaching of Christ that is not prohibitive, but proactive. Jesus Christ admonishes his followers to “love your neighbor as yourself.” Love in this passage is translated from the Greek word agape, which means unconditional love. The recipients of agape love are whoever we meet along the road of life, including our enemies. Habitat strives to put agape love into action by facilitating access to housing credit.

Love drives us as leaders in the Habitat movement to find the most efficient and just way to facilitate financing to the millions of people without access to housing credit—the “un-banked.” Facilitating access to housing credit is core to our roots. It is the central teaching of Clarence Jordan, biblical scholar and spiritual father of Habitat for Humanity, as he advocated that “what the poor need is capital—not charity.”

Paul Hamalian is the director of Global Finance at Habitat for Humanity.