Credit cards vs debit cards for your church.

We often get asked if we think using a credit card for a church is bad or if churches should only use debit cards. The short answer: we prefer churches use debit cards, but probably not for the reason you think. 

Because credit cards benefit the most when you carry a balance (not pay it in full each month), the entire strategy around their cards are built to encourage you using this card, from points to miles to cash back. Additionally, credit cards often set higher monthly credit limits than what most ministries spend in a given month. None of these things are inherently bad, but it takes a really, really detailed and dedicated person to keep track and actively manage it.

Conversely, debit cards tied to your specific ministries account gives you guardrails in your monthly spending. You have access to only the funds in your account and when they're gone, they're gone. The "spending limit" is directly tied to the funds in the account for your ministry. 

Here's the simplified version of our bank/debit card process:

1. Every ministry gets their own bank account and debit card, multiple cards if there are multiple staff.
2. On a given day (weekly, bi-monthly, or monthly), we deposit the percentage of total giving this ministry has budgeted each month. If we receive less than forecasted, they receive less. **Download our simple tool that calculates what each ministry should get based on your budget.
3. The pastors within that ministry use this account for their purchases for subscriptions (recurring), for supplies, and any other ministry-related need. ** Large purchases such as travel for 30 people going on a mission trip must be submitted through a purchase order and will be done through the central office's operating account. 
4. These transactions are reviewed and signed off on by the appropriate person each time period (weekly, bi-monthly, or monthly) and submitted with receipts.
5. The executive pastor and their staff have centralized access to all accounts online and can monitor it at any time.

This system does two primary things:

1. It ensures cash flow is always healthy because you can only spend what you have (think grandma's envelope system with cash...but with bank accounts).
2. It gives clarity and transparency to what each ministry spends and prevents co-mingling of funds.

The one concern we hear from churches when considering using bank accounts is with a bank account, they can spend everything that's in it. A credit card prevents that fraud because you can dispute charges and it's not taking money from your account immediately. We understand their concern and would offer the following rebuttal:

• You can set daily spending limits on bank accounts/debit cards
• You can dispute charges on a debit card just like on a credit card.
• You typically have a lower daily threshold on a debit card than the on a credit card. 

While there are both risks and benefits with each, we've had the most success in increasing the financial health of the church with using debit cards. It's not because we think credit cards are the root of all evil. We find debit cards are easier to manage, give better guardrails for spending and fraud, and can be implemented into a system that provides better cash flow for the organization.