What does the Bible mean by grace?
Someone summarized the biblical doctrine of grace as:
GRACE: God's Riches At Christ's Expense.
The New Testament word charis is most often translated "grace," especially pertaining to God's gift of salvation in Christ.
It is because of Christ's death for us that a holy God is able to exercise grace toward us and yet remain righteous in doing so. He paid the cost and offers the gift of salvation as a free gift to us. It is a gift, not something we derserve or can ever earn by good works, Ephesians 2:8-9 says,
For it is by grace you have been saved, through faith—and this is not from yourselves, it is the gift of God— not by works, so that no one can boast.
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How is grace different from mercy? Some have observed that mercy is not getting the punishment deserved while grace is getting something good you don't deserve.
It was God's mercy out of love that moved Him to provide a Savior for us. But God could not save us just on the basis of mercy alone! The price had to be paid.
We receive by faith God's Riches At Christ's Expense:
But because of his great love for us, God, who is rich in mercy, made us alive with Christ even when we were dead in transgressions—it is by grace you have been saved (Ephesians 2:4-5).