The creditor hath a better memory than the debtor.
— James Howell

There are those who claim that credit cards are a pure, unadulterated evil. No matter how iron-clad your personal discipline and willpower may be, these people claim, it doesn’t matter. It is simply impossible to use credit cards responsibly.

My response: Horse Hockey.

A credit card is a tool. Like any other tool, credit cards can be used or abused. While it is true that abuse is rampant, that doesn’t mean it’s impossible to use them well. Like it or not, the system works the way it works, and having a good credit rating is useful when it comes time to purchase a house or finance a business venture. Responsible credit card use is the only way I know of to build a solid credit history without ever actually having to pay any interest.

I do have some sympathy for Dave Ramsey’s position on this. While I may disagree with his black-and-white thinking on this point, Dave speaks to a broad audience, and it is true that the overwhelming majority of people would be better off avoiding credit cards entirely. There’s no doubt in my mind that if everyone did this, the world would be a better place.

Furthermore, I have no doubt that there is truth to the studies showing that most people tend to spend more when using credit cards than when using cash.

I’m equally sure, however, that I am not “most people,” and neither are you. As is so often the case, the truth is more nuanced than the talking points you’ll hear from the Suze Ormans and Dave Ramseys of the world. In short, it is possible to use credit cards to your benefit. You can start by faithfully abiding by the following commandments:

I. Thou shalt pay off thy balance in full every month, on time, preferably through automatic debit.
Paying off in full every month means you won’t be charged any interest. You’re basically getting a 30-day loan from the bank for free, plus any rewards you may have earned. You also get better fraud protection than debit cards, and it’s much easier to track credit card purchases over time than when using cash. This is how you game the system — but only if you keep your discipline.

II. Thou shalt make no exceptions to commandment I, ever — unless thou dost really and truly — no, not even then. Never. Really. Never.
You know that really obvious extreme example of an exception you thought of when reading this? Not then, either. Find another way.

III. Thou shalt not pay an annual fee.
Some may suggest that paying an annual fee is rational if the rewards program is so good that you’ll more than make up the difference. To me, that smells like an incentive (or excuse) to spend more, which is the last thing anyone needs.

IV. Thou shalt never allow thy credit card balance to exceed thy bank account balance.
Yes, I know the credit card bill doesn’t come until the end of the month, and you’re going to get paid on the 15th. This is still a good rule to follow, as it keeps your credit card spending linked in your mind to your cash on hand.

V. Thou shalt read and understand every last word of fine print in thy credit agreement.
Beware — here there be dragons. Credit card agreements are infamous for being full of traps for the unwary. Best hunt them out up front before an issue arises. And don’t just skim over legal mumbo-jumbo that you don’t understand. If an unfamiliar term like two-cycle method catches your eye, look it up.

This includes any addenda your provider may send you in the mail for existing accounts, by the way.

VI. Thou shalt sign up at Mint.com, and track all of thy purchases.
You can substitute a different tracking tool if you want, so long as you track every single penny of your spending.

VII. Thou shalt review thy purchase history frequently, and guard against identity theft.
Read through your purchases monthly at a minimum. (Mint makes it easy to do this for all of your accounts at once.) Keep a close lookout for fraudulent transactions, and ensure your purchases are properly categorized. This will help later on, when you want to research your spending habits over time.

VIII. Thou shalt check thy credit report yearly, and correct any errors thou dost find.
For better or worse, your credit rating affects everything from mortgage rates to your job prospects. You had best review yours regularly, and closely, because 4 out of 5 credit reports have errors. Scary, but true.

Be sure to go to the right place to pull your reports, too. AnnualCreditReport.com is the only official site to get your free annual credit reports from all three major agencies. 99% of the other sites advertising “free credit reports” are scams. Here’s an easy test: If you must use your credit card to get your “free” credit report, you are being scammed.

IX. Thou shalt choose a rewards program that dost not encourage further spending.
Skip the frequent flier miles programs, and various other “points” schemes that only encourage further consumption. Prefer cash rewards that are applied directly to your bill, or direct-deposited in a bank or brokerage account.

X. If thou canst not in good faith follow commandments I through IX, thou shalt not carry a credit card.
Be honest with yourself. If you can’t keep your discipline, then Dave Ramsey may have been right about you, after all. Better not to use a credit card at all if there’s any risk of misuse. Don’t feel too bad — you’re far from alone in this regard. But you’d be well advised to cut up any cards you may have, lest you succumb to temptation.