Good reasons to use the plastic

"I don't know if it's good or bad, because for some people it can meet their immediate needs, if they manage it well. Some people I know -- grad students -- are smart and always keep it at a zero-percent balance transfer rate," he says.

Make float work for you

For many people, the best benefit of a credit card is what the bank always enjoys: the float.

Depending on your credit card, you'll get a grace period of 25 to 35 days before you have to pay.

"A credit card is good for float, if you know money is coming," says O'Neill. "If you're getting a tax refund or retroactive pay, it can be a good short-term emergency fund or a short-term loan for yourself."

Meanwhile, your money could be earning interest in a money-market account while the credit card company fronts some cash for you.

Gas rebates and cold cash

Apart from a short-term, interest-free loan, you can often get some extra sweetener out of your credit card, ranging from a cash reward to discount coupons at your favorite stores.

"My first choice for everything would be credit cards, because you get something back," says Bilker. "If you can use rewards, it's great. But everyone can use cash-back rewards."

Bilker also takes advantage of special starter offers, such as those for new holders of cards bearing the name of Wawa convenience stores, a 500-store chain in five Mid-Atlantic states.

"Wawa has this great deal, where for the first 90 days you get 10% off purchases with Wawa and 4% everywhere else," he says. "That 10% includes gas, and I've gotten $400 worth of rewards. That's five weeks of gas for two vans."

Good things come to those who read the fine print and charge.

"With my Citibank card, I got 10% cash back on home remodeling," Bilker says. "I charged $10,000 on the card. Bill comes -- it's $9,000."

Bilker is a fan of the charge-it-all strategy, even for a bottle of water. "There's nothing wrong with charging groceries, though everyone gets upset when I say that."

Still, it's easy to think you're being a smart consumer because you're getting rewards, but that's true only if you buy just what you need.

"Don't buy extra stuff," says Bilker. "They're hoping you say, 'I'll go out and buy a plasma TV because of the rewards.' If you're going to buy a big-screen TV, and you're planning to buy a $2,000 model, and then you end up charging a $4,000 TV, that's the mistake."

Watch reward limits

There are other essentials for enjoying the best of credit cards, experts say.

"People should check out the limits and caps of their cash-back or rewards credit card," says O'Neill. "Some cards cap the amount of annual reward that you can earn.

"For example, my GM card allows earning only up to $500 annually. When you reach the maximum annual reward, you might want to switch to another card to earn rewards there."

And as always with credit cards, it's essential to read the fine print.

"Users need to be aware of the limitations on the use of reward dollars," O'Neill says. "You might only be able to use rewards for specific product brands or types of merchandise, so be sure they are items that you really want."

Caveat for those in deep debt

The small perks of credit cards might not be worth the risks for those who have run up heavy debt, credit counselors say.

"If people are in trouble, we work with them to close all their accounts and not use any line of credit while being in the program," says Zorina Gonzales, a customer service representative with Consumer Credit Counseling Service in California's Sacramento Valley. She says the exact plan varies, depending on the individual case and individual budget.

Often, a credit freeze is recommended until the client is back on solid ground.

"We suggest cutting up cards, closing accounts and not using any line of credit unless it's to purchase a vehicle or a home," Gonzales says.

Of course, not using any credit cards can be annoying, Xiao says.

"When we do research, we see a lot of inconvenience," he says, referring to those on the cut-the-cards plan required by most debt-management programs. "If you stop using credit cards, you lose the protection of using credit cards. You'll have some difficulty in real life. You'll have problems buying tickets online, for example.

"I think the most important part is to make sure you can control it," says Xiao. "If you can control it, it's a good thing."

This article was reported and written by Aviya Kushner for Bankrate.com

Updated Dec. 21, 2007

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