Many personal-finance thought leaders shun the use of credit cards. Dave Ramsey even goes so far as to say, "There is no positive side to credit card use." If you let your credit limit dictate your spending instead of your income or bank account, credit cards can become a burden instead of a tool to make the most of your finances.

For most smart consumers, though, owning a credit card offers a whole bunch of benefits unavailable to you if you pay with cash or debit cards. As long as you're spending an amount that you can pay off at the end of the month and still save for your financial goals, you should definitely have a credit card in your wallet.

Here's why it's a good idea to apply for a credit card.

A gloved hand reaching through a computer screen to steal a bank card from a wallet.

Image source: Getty Images.

Credit cards offer better protection from fraud

Every time you make a purchase online, over the phone, or even in stores, your card information is at risk. That's why it's a good idea to use a credit card instead. Using a credit card offers much more protection from fraud compared to a debit card should your information fall into the wrong hands.

Most credit card companies will even send you an alert if they suspect fraudulent activity on your card. Fixing the problem is as easy as issuing a new card with a new account number. The credit card company will take care of dropping the fraudulent charges. If you see charges that you or an authorized user didn't make on your statement, a simple phone call will clear things up. Your credit card might be out of commission for a couple of days, but it beats having to deal with a stolen debit card account.

With a lost or stolen debit card, the thief has access to your entire checking account. If he drains the money out of the account, you could miss important bill payments and rack up penalties. That's just one reason credit is more protective.

Even worse, you may be completely liable for fraudulent charges if you don't notice the problem soon enough. As long as you report it quickly, you won't have any liability for fraudulent debit card transactions if you still have the card in your possession. For lost or stolen cards, if it takes you less than a couple of days to report, you'll only be on the hook for $50. If it takes you longer, you could be liable for up to $500. If you take longer than 60 days to report fraudulent activity, regardless of whether the card was lost, you'll be completely liable for all charges.

Credit cards give you free insurance against damaged, lost, or stolen goods

If you buy something with cash or a debit card, you usually have no way to get your money back in the case of stolen or damaged items. But if you put that purchase on your credit card, there's a good chance the issuing bank can help you out if you accidentally break something or it gets stolen within the first three or four months.

Each card network has its own rules, so it's a good idea to check the benefits of your card before you make a big-ticket purchase. MasterCard usually has the best purchase protection policy of the major networks, and it's widely accepted.

Some credit cards also offer free extended warranties. So even if the manufacturer's warranty expired, it may still be within the time frame to use the credit card's extended warranty.

A tablet computer with a shattered screen.

Image source: Getty Images.

Credit cards help you get the best price

Many credit cards also provide price protection. So if you make a purchase today, and two weeks later the price drops, you can ask the credit card company to refund the difference. If you paid with cash or debit, you'd be at the mercy of the store where you bought the item.

Not all cards offer price protection, and it's not an automatic benefit like the purchase-protection and extended-warranty benefits already described. Make sure you check your credit card's benefits and stay on top of price changes for a few weeks or months after making a big-ticket purchase.

"Are you covered?" carved into the sand on the beach.

Image source: Getty Images

Credit cards might give you free travel insurance

If you book travel using the right credit card, you're often entitled to free insurance to protect you against all sorts of travel-related problems.

You can get free travel accident insurance to help cover some of the costs of any health problems incurred while traveling. Free luggage insurance helps replace items lost by a carrier in transit. Some cards may even provide assistance to cover essentials if your luggage is delayed. Others offer coverage for when your flight is delayed or canceled and you have to book unreimbursed arrangements, like a night at a hotel. Yet others will refund nonrefundable prepaid expenses if you have to cancel a trip because of illness or natural disaster.

Credit cards may also offer free collision insurance for rental cars. You can just deny coverage through the rental-car agency if you pay with a credit card that provides that benefit.

A downward-looking view of a smiling woman holding a credit card, lying on a floor with a suitcase, hat, map, camera, and passport.

Image source: Getty Images

Credit cards reward you for spending

Besides all the protective reasons you should make purchases with a credit card instead of cash or a debit card, credit cards will give you something extra for every purchase. On top of lucrative sign-up bonuses, credit cards offer reward points or cash back on every purchase you make.

Those rewards can be redeemed for anything from free flights and hotel stays to simple statement credits or cash in a linked checking account from the issuing bank. Some credit card rewards points can even be used for tickets to big events such as concerts, musicals, and sports games.

Many credit cards offer varying levels of points or cash back based on the category of the merchant you're spending in. But at the very least, you should be able to get 2% cash back on every purchase you make just by using a credit card.

Close up of several credit cards fanned out.

Image source: Getty Images.

Which credit card is right for you?

Now that you know all the reasons you should use a credit card instead of debit or cash, it's time to figure out which ccard is right for you. With so many options, each with its own set of benefits and fees, it can be hard to figure out which one to apply for.

If you want to take advantage of the travel insurance benefits, the Chase Sapphire PreferredⓇ offers excellent travel protection as well as purchase and price protection. It requires you to pay a $95 annual fee after the first year, though. You can still get some of the protections through Chase FreedomⓇ and Chase Freedom Unlimited, neither of which charges an annual fee.

If you're a frequent traveler, you may be interested in checking out our picks for the best travel credit card.

For those looking for extra protection on their every.day purchases, the Citi ThankYou Premier and Citi Prestige card offer some of the best terms. Both are MasterCards offering 120 days of purchase protection (90 days for New York residents). Citi also offers an extra 24 months on manufacturer warranties, and it'll refund you the difference in price if you find a better deal within 60 days. Both cards carry annual fees, but you can get nearly the same benefits from some of Citi's no-annual-fee cards, like the CitiⓇ Double Cash Card and CitiⓇ Diamond PreferredⓇ.

If you're most interested in earning cash back on your purchases, check out our picks for the best cash-back credit cards.

Man sitting in front of a laptop with a bank card in one hand.

Image source: Getty Images

The best time to apply for a new credit card

The best time to apply for a new credit card is a few weeks before a major purchase. Not only will it help protect your new purchase or travel plans, but it'll also help you reach the minimum spending requirements for the sign-up bonuses many credit cards offer. While these offers can be lucrative, credit card issuers bank on not having every new cardholder reach the minimum spend requirements to unlock the bonus points.

So if you're planning to buy a new computer, you want to book a vacation, or you have a semiannual insurance payment coming up, you may want to consider applying for a credit card to take advantage of that planned spending.

If you sign up for a card without a plan to reach the minimum spending, you could end up wasting an opportunity for bonus points or, worse, spending more than you can afford to get the bonus. Remember, no amount of bonus points is worth going into credit card debt for.

Now that you know why you should get a credit card and when it's a good time to apply for one, do some research and find the best credit card for your needs before you sign up for the first offer you see.

Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Mastercard. The Motley Fool has a disclosure policy.