The world of credit seems to be a one-way trip into debt, but if you are smart and responsible there are many ways to reap rewards from credit cards. Almost every credit card company tries to cater to niche consumers with specialized points and rewards, but there are more perks to having a credit card than freebies and discounts. Read on for a breakdown of the kinds of rewards and benefits you can expect from having a credit card.



1. Frequent Flyer Miles These are best for big spenders and big travelers. By spending in the right places, you can often double the amount of frequent flyer miles you can get just be traveling. Even if you don't save up enough for an entire flight, you can often get your seats upgraded or get discounts with your miles.

2. Cash back Cash back rewards are best for people who don't spend a lot, and thus wouldn't accrue tons and tons of points. Most cash back programs give bonuses on purchases such as gas and groceries, essentially giving you a 1% to 3% discount on your everyday purchases.

The secret to finding the best cash back rewards card is by optimizing your plan to fit your spending habits. Take a look at your bank statements and try to calculate how much you spend and where. If you spend most of your money at gas stations, get a card that offers bonuses on gas. If you spend a lot of money on travel, get a card that offers rewards on airline purchases.

3. In-store discounts In-store discounts are designed to build customer loyalty by offering special storewide discounts to card holders. The secret to taking advantage of these deals is to maintain responsible spending habits. While you might be getting a 10% discount on everything in the store, you won't be saving any money if you buy 200% more items.

Also, some credit card offers only apply to the purchase you are making the day you sign up for a credit card. So, if you foresee a large purchase coming up-Christmas, birthdays, weddings, etc.-it is a good idea to hold off on signing up for the credit card to maximized your savings.

4. Building credit The best reason to get a credit card is that it establishes a credit history. When calculating your credit score for those big purchases-auto loans, mortgages, etc-credit bureaus factor in how long you've had a credit history and how long you've kept it in good standing. So, even if you have a card that you rarely use, it is better than having no card.

Many credit card companies offer cards for people with no credit or bad credit history. You can get a secured credit card or a card with a lower credit line if you are just starting out. These cards reduce your liability and help build your credit so you can get better terms in the future.

5. Less liability As long as you aren't grossly negligible, most credit cards won't hold you liable if your card is lost or stolen. While the cash in your wallet is gone forever if you get mugged or lose it some other way, you can usually exercise at least some damage control on your credit cards.

In fact, credit card companies are required by law to charge you a maximum of $50 on charged made with lost or stolen credit cards as long as you report them as lost or stolen before the transactions are made.

6. Better money management With a credit or debit card, all your transactions are recorded electronically, saving you from balancing your checkbook by hand or budgeting manually. Many banks offer spending reports that break down your purchases into categories so you can quickly and easily see where most of your money is going to.

7. Ease of use This is perhaps why most people sign up for credit cards. Nowadays, there are few places that won't accept credit cards and some that only accept credit cards. For making purchases online, over the phone or in foreign countries, carrying a credit card is the most convenient way to go.

8. Easy ID Some institutions, such as the US Postal Service, use credit cards to verify your identity. If you need to prove your age or make electronic authorizations, credit cards are the best way to get it done without a lengthy processing time.

9. Good for emergencies Credit cards are best used in emergencies. Just make sure you know what constitutes an emergency-when you are stranded, lost your luggage, or your car breaks down. Having money wired or mailed can take time and cost you fees, whereas a credit card can get you out of a jam hassle free.

10. Learn responsible spending habits Credit cards are often a double-edge sword, and prove as a rite of passage into the world of lending. If you can keep track of your spending, get your payments in on time and keep your account in good standing, you'll be better prepared for larger loans in the future.