It's a simple fact that in order to establish credit, you have to use credit. For that reason alone, it's a good idea to use credit from time to time. Beyond that, there are also certain types of purchases that you should always use credit cards for because of the increased security that cards offer. Many credit cards also offer additional perks like points earned on purchases, which can really add up over time, essentially equating to "free money" for those who are consistently able to pay off their card balances, never having to pay costly interest fees.

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Note, however, that cardholders should fully understand the perks, features, and limitations of their cards' programs such as cash back, and use those categories of purchases as “credit only” as well. For example, the Amex BlueAdvantage card offers 6% back on groceries up to a certain dollar amount each year. That’s a huge discount on the weekly grocery bill and makes it a must-have for families with large grocery orders. Those “key purchase” categories also extend to affinity cards like the GM credit card where the perk itself can be directed to a specific purpose, such as a new car.

KEY TAKEAWAYS

• Many credit cards feature rewards or points programs that make it beneficial to use those cards for particular purchases.
• Credit cards also often feature consumer protections such as warranties, insurance coverage, or fraud protection.
• There may be lots of perks offered by the card issuer, but keep in mind that the money to cover those perks is coming from somewhere—and that's typically from the wallets of unwitting consumers who have failed to pay on time.

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