Not All Interest is Usury: A Biblical and Historical Examination

I. The Biblical Foundation of Usury

The Scriptures do not shy away from matters of money, property, and exchange. These questions strike at the heart of neighbor love and covenantal faithfulness. The treatment of usury is particularly striking, because it reveals both the generosity of God’s Law and the dangers of human greed. Some modern definitions often obscure the biblical picture, reducing usury to “any interest at all.” A more careful reading of Scripture reveals a moral distinction between charitable loans meant to relieve distress, and commercial loans meant to promote productivity.

A. The Mosaic Law

The law of Moses addresses usury explicitly, and in multiple places. The most straightforward passage is found in Exodus 22:25:

“If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.”

The key here is the condition of the borrower: “who is poor.” The poor Israelite is not borrowing to expand a business or finance a venture, but to survive. He borrows to buy grain, seed, or food to sustain his household. Charging him interest would mean turning his hardship into personal profit.

Leviticus 25:35–37 clarifies the charitable dimension of such loans:

“If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit.”

The command here is not only prohibition but also positive duty: support your brother as you would the resident alien who depends on your kindness. The law of God connects economics with covenantal mercy. To charge interest to the poor would invert God’s generosity to His people, turning the covenant into an instrument of oppression.

Deuteronomy 23:19–20 adds nuance:

“You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the LORD your God may bless you in all that you undertake in the land that you are entering to take possession of it.”

The text distinguishes between Israelites and foreigners. Within the covenant community, lending should be charitable. With foreigners, particularly in trade and commerce, interest was permitted. Israel was not to export poverty or predation, but in dealing with outsiders in commercial ventures, a fair rate of interest was legitimate.

B. Additional Old Testament Witness

The Psalms and Prophets reinforce these laws. Psalm 15:5 describes the righteous man as one “who does not put out his money at interest and does not take a bribe against the innocent.” To lend at interest to the poor was considered so contrary to covenantal justice that it disqualified a man from fellowship with God’s people.

Ezekiel 18:13 declares: “If he lends at interest and takes a profit, shall he then live? He shall not live. He has done all these abominations; he shall surely die; his blood shall be upon him.” Here, usury is listed alongside robbery, idolatry, and adultery. It is seen not as a small error but as a grievous abomination.

Nehemiah 5 records an example of abuse: nobles and officials in Jerusalem were charging interest to their fellow Jews during famine. Nehemiah rebuked them, saying, “You are exacting interest, each from his brother” (v. 7). The nobles responded by restoring fields, vineyards, and homes, and by ceasing to charge interest.

Thus, the Old Testament provides a consistent pattern: usury is the exploitation of the weak. Interest itself is not universally forbidden, but it is condemned when levied on loans of necessity.

It can be helpful to note that because the sin of exploiting the poor through usury was so widespread, the word usury itself was often used as shorthand for all forms of interest, whether exploitative or legitimate, much like how Proverbs 14:23 says, “In all toil there is profit, but mere talk tends only to poverty,” where toil and work are so closely related that they can be used almost interchangeably, even if the ideas are not identical.

C. New Testament Continuity

The New Testament does not abrogate this principle. Christ’s words in Luke 6:34–35 point to generosity without expectation of return:

“If you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount. But love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High, for he is kind to the ungrateful and the evil.”

Jesus radicalizes the Mosaic command by calling His followers to go beyond justice to mercy. Christians are called to lend not only without interest but without expecting repayment at all, imitating the Father’s generosity.

At the same time, the New Testament recognizes the legitimacy of commerce and return on investment. In the parable of the talents, the master rebukes the slothful servant: “You ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest” (Matt. 25:27). The primary point of the parable is not about finance, but it does acknowledge interest as a normal feature of business through this lesser to greater argument.

D. The Moral Principle Summarized

The biblical witness consistently distinguishes between two kinds of loans:

1. Charitable loans to the poor. These are to be given freely, without interest, as acts of mercy.

2. Commercial loans for enterprise. These may justly involve interest, provided they are not exploitative.

   
   

The moral heart is clear: usury is unjust gain at the expense of another’s hardship. Interest itself is not condemned; exploitation is.

II. Usury Through the History of the Church

The church’s interpretation of these texts has varied widely. At times, the church outlawed all forms of interest. At other times, theologians and church leaders distinguished between exploitative usury and legitimate commercial lending. The pendulum swung between rigor and accommodation, as the church sought to apply biblical principles to changing economic realities.

A. The Patristic Period

The Fathers spoke with a strong prophetic tone against usury. They viewed it as a violation of both Scripture and charity.

Basil the Great declared:

“Lend without usury, and you will receive usury from God. But if you lend at usury, you will not receive mercy. Do not make profit from the misfortunes of men, nor take interest on the miseries of others.” (Homily on Psalm 14).

Ambrose of Milan warned:

“What is usury except to kill a man little by little? You take from him time, which belongs to God, and you consume him as surely as if you had robbed him outright.” (De Tobia, 15).

Jerome, commenting on Ezekiel 18, echoed this judgment:

“He who lends to the poor at interest is a murderer of the poor.”

The Council of Nicaea in 325 prohibited clergy from taking interest, under penalty of deposition. Canon 17 stated: “If any cleric is found to have taken usury, let him be deposed from the clergy.” For the Fathers, usury was incompatible with the spirit of Christ, and especially with the calling of ministers of the gospel.

B. The Medieval Period

By the Middle Ages, the condemnation of usury had hardened into law. Scholastic theologians elaborated systematic arguments against all interest, drawing especially on Aristotle and Augustine.

Thomas Aquinas summarized the scholastic view in his Summa Theologica:

“To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality, which is contrary to justice.” (II-II, Q.78, Art.1).

For Aquinas, money is a purely a medium of exchange, not a productive asset. To demand payment for its use was to sell something unreal, and therefore unjust.

Canon law followed this reasoning. The Third Lateran Council (1179) decreed: “We condemn that practice commonly adopted in the world whereby usurers demand payment for loans. And if any are found to practice it, let them be cut off from the communion of the faithful.”

This prohibition was enforced unevenly, but it shaped medieval society. Christians were often barred from moneylending, leaving the trade to Jews, who were not bound by canon law. This in turn fueled anti-Semitic tensions, since Jewish lenders were both necessary and resented. Of the nearly 100 expulsions of the Jews from European countries, kingdoms, and territories, 27 of them specifically cited economic reasons for the expulsion.

C. The Tensions of Commerce

Despite prohibitions, commerce advanced. The growth of trade, particularly in Italy, required credit. Venice, Genoa, and Florence became centers of banking, and new instruments such as bills of exchange emerged. These provided ways to extend credit while avoiding the appearance of interest.

Merchants and bankers sought to justify their practices. The Florentine merchant Benedetto Cotrugli wrote in Book on the Art of Trade (1458):

“Trade cannot exist without credit, and credit cannot exist without profit. Those who condemn all profit on money understand neither trade nor justice.”

Here we see the recognition that absolute prohibition was untenable in a world of expanding commerce.

D. The Venetian Example

Officially, the church forbade usury. Practically, the Republic of Venice thrived on credit. Venetian thinkers and jurists drew distinctions between moderate and excessive interest, condemning the latter as usury but tolerating the former for the sake of trade.

This created a two-tiered moral system: in theory, all interest was usury and sinful; in practice, moderate interest became essential for commercial survival. Venice prospered, but the tension between moral law and economic necessity exposed the inadequacy of the medieval framework.

III. The Reformation and Usury

The Protestant Reformation was not merely a theological renewal but also a cultural and economic turning point. The Reformers confronted the legacy of medieval scholasticism on usury, which had outlawed interest in every form. They returned to the Scriptures with renewed vigor, asking whether the biblical prohibitions truly required such absolute bans. Their answers reshaped Christian attitudes toward finance for centuries to come.

A. Martin Luther: The Fierce Opponent of Exploitation

Luther inherited the medieval suspicion of usury, but he also lived in a society experiencing the beginnings of modern credit markets. His critique was as fierce as any of the Fathers, though often more vivid in imagery. In On Trade and Usury (1524) he thundered:

“Usury is a great, huge monster like a werewolf, who lays waste all, more than any Cacus, Gerion, or Antaeus. And yet we cheerfully permit it. Princes and lords must watch over such things and prevent them, as they would a fire, a flood, or the plague.”

For Luther, usury was not simply a private sin but a public evil that could destroy entire communities. He considered it worse than open theft because it cloaked robbery under legality. In his Exhortation to the Clergy (1525) he wrote:

“To let usury go on is the same as to throw the whole land and all the people into the hands of the devils. Usury is contrary to God and man. It is robbery and murder, and yet it is common, and people pay no attention.”

At the same time, Luther’s realism showed. He did not object to every instance of return on money. If lending was part of legitimate trade, and if it did not exploit the needy, he could accept it. He distinguished between “necessity loans” to the poor, which must be free of interest, and “enterprise loans” for business, which might allow some moderate profit. But Luther’s tone remained overwhelmingly hostile, particularly to the social abuses of his day where peasants were driven into poverty through debt.

B. John Calvin: Moderation and Distinction

If Luther thundered, Calvin systematized. His most famous statement on usury comes from a letter written in 1545 to Claude de Sachin, a French nobleman. Calvin rejected the medieval absolutism that condemned all interest, noting that the Mosaic law itself permitted interest to foreigners. Keep in mind that Calvin conflated usury and interest entirely, using the words interchangeably throughout his works; whereas we would make a distinction between legitimate interest and usury. He argued:

“I do not hold that all usury is to be condemned without exception. Only let us beware that the poor be not burdened, and that money be not sought for gain, but for honest and lawful uses.” (Letter on Usury, 1545).

Calvin set forth four guiding principles:

1. Do not oppress the poor. Loans of necessity must be interest-free.

2. Keep within civil law. Christians must not exploit loopholes or evade lawful limits.

3. Distinguish charity from commerce. Lending to a starving man is different from lending to a merchant financing a caravan.

4. Avoid excess. Moderate interest may be tolerated; exorbitant rates are usury.

   
   

Calvin’s distinction was groundbreaking. By separating exploitative usury from legitimate commercial interest, he provided a theological framework for the emerging capitalist economy of Geneva and beyond.

He was still cautious though. In his Commentary on Psalm 15 he warned:

“The Holy Spirit condemns all usury indiscriminately. But it is well known that among the Jews it was not unlawful to lend on usury to strangers. In like manner, we must always beware that the poor be not burdened, and that we do not exact from them more than is just.”

Thus, Calvin recognized the complexity of the issue. He maintained the biblical prohibition of exploiting the poor, while allowing for commercial lending in moderation.

C. Other Reformers and Reformed Voices

The broader Reformation reflected Calvin’s moderation rather than Luther’s absolutism. In Zurich, Heinrich Bullinger permitted moderate interest in commerce. In Scotland, John Knox echoed Calvin’s warnings against oppression but did not prohibit interest outright.

By the seventeenth century, Reformed theologians were increasingly comfortable with commercial credit. The Dutch Republic, heavily influenced by Calvinism, became a center of international finance. Yet theologians like Gisbertus Voetius still stressed moral responsibility. He wrote:

“Usury is sinful when it is against equity, when it is against charity, when it exceeds what is moderate, or when it oppresses the needy.”

In the nineteenth and twentieth centuries, thinkers like Abraham Kuyper and Herman Bavinck carried this tradition forward. Bavinck, in Christian Worldview, explained:

“The essence of usury lies not in the percentage as such, but in the fact that the lender seeks his own advantage without regard for the needs or interests of the borrower.”

The Reformed tradition thus consistently emphasized justice and love of neighbor. Interest itself was not condemned, but exploitation always was. Note that they did not seem to have the linguistic distinction between usury and interest, largely because of the scholastic flattening and conflating of the two terms; this complicates modern discussions.

IV. Usury in the Modern Economy

The modern world differs radically from the agrarian economies of Scripture or even the mercantile economies of Venice and Geneva. Fiat money, global banking systems, and inflation have transformed finance. Yet the moral principles articulated in Scripture and refined in church history remain fully relevant. The challenge is to apply them faithfully to our context.

A. The Nature of Money

Medieval thinkers were right to observe that money itself is “barren,” since it does not reproduce like crops or livestock. Yet barrenness does not mean that every form of interest is unjust. When someone lends money, he foregoes the ability to use it productively elsewhere; this is the opportunity cost of lending. He also assumes the risk that the borrower may default and fail to repay. Interest, in its legitimate form, compensates the lender for these two realities: the loss of alternative use and the assumption of risk. The injustice of usury arises by profit out of proportion to risk and cost, especially when the borrower is poor and in need.

In a modern economy, the notion of money as entirely “barren” is even less relevant. With very few exceptions, money placed within the financial system does not sit idle but is actively circulated to support broader economic activity. While money itself remains a medium of exchange and not inherently productive, the structures of modern finance mean that stored balances are rarely inert in practice.

B. The Continuing Relevance of Biblical Principles

The biblical prohibitions remain timeless. Exploiting the poor through predatory lending is usury. The Mosaic laws against burdening a brother in his distress apply with equal force to payday loans with 400% annualized rates as they did to interest on a bag of barley.

At the same time, the allowance for interest in commercial dealings also remains. A bank loan to finance a business venture, or a mortgage structured at reasonable rates, is not inherently usury. The moral question is whether the terms reflect justice and love of neighbor.

C. Modern Examples of Usury

The clearest modern parallels to biblical usury are found in high-interest debt traps. Examples include:

• Payday lending. Loans targeted at the poor with effective annual rates exceeding several hundred percent. These are not designed to enable productivity but to extract profit from desperation.

• Predatory credit practices. Hidden fees, misleading terms, and compounding structures that ensure the borrower becomes trapped in a cycle of debt.

• Exploitative international lending. Wealthy nations or institutions imposing debt structures on poor nations that cripple rather than develop them.

In each case, the borrower is driven by necessity, and the lender exploits that necessity for gain. This is precisely what the law of Moses condemned.

D. What Counts as Reasonable Interest Today

How then should Christians discern reasonable interest in modern finance? While Scripture does not provide a percentage threshold, it does provide principles. Interest may be considered just when:

1. It corresponds to real risk and cost. Lenders take on the risk of default and the opportunity cost of lending. A fair rate of interest reflects this, not more.

2. It adjusts for inflation. Since fiat currency loses purchasing power over time, compensation for inflation is not exploitative but fair.

3. It serves productivity. Loans that finance enterprise and enable families, churches, and communities to exercise dominion are legitimate. Loans that enslave to consumption are destructive.

As long as these principles are met, and the contract is entered into willingly by both parties, there is no numerical cap on what could constitute legitimate, reasonable interest.

E. The Witness of the Church Today

The church must speak with clarity about usury. It cannot collapse into the error of condemning every form of credit, nor can it fall into the opposite error of blessing every financial practice without scrutiny. Scripture calls us to something more precise: to distinguish between lending that serves and strengthens households, and lending that weakens and exploits them.

The call is twofold:

• To condemn exploitation. Churches should speak boldly against payday lending, predatory credit, and oppressive international finance.

• To affirm just credit. Churches should encourage lending practices that enable productivity, sustain families, and build communities.

  
  

Usury, rightly understood, is not the presence of interest alone but the absence of justice through the means interest.

Conclusion

From Luther’s thunder to Calvin’s moderation, from Aquinas’ prohibitions to Bavinck’s clarifications, the history of usury shows the church struggling to apply God’s Word to economic life. Scripture is clear: do not exploit the needy, but steward resources in love and justice.

In our modern system, the temptation remains the same. Interest becomes usury when it exploits weakness. It becomes just when it reflects risk, cost, and productivity. The line is moral, not mathematical.

Usury is sin, but just lending is service.

Disclaimer

This article is intended solely for educational, theological, and historical purposes. It examines biblical principles, church history, and moral considerations regarding the concept of usury. Nothing contained herein should be interpreted as financial, legal, tax, or investment advice. The discussion of interest, credit, lending practices, or modern financial systems is presented in a general, conceptual, and historical framework and does not constitute a recommendation for any specific financial product, service, or strategy.

Readers should not rely on this article as the basis for making financial decisions. Individual circumstances vary, and financial decisions should only be made after consulting qualified professionals who can consider personal objectives, needs, and regulatory requirements. Neither the author nor any affiliated entities are licensed to provide securities or investment advisory services through this publication.

Any references to historical practices, biblical teaching, or modern economic realities are for context and education, and should not be construed as endorsements or condemnations of specific financial institutions, products, or instruments. Past historical or theological perspectives do not guarantee or predict future financial outcomes.