We're often warned of the dangers of credit card abuse, and truth be told, if you're not careful, you could wind up with a mountain of debt from using your credit card. But credit cards aren't all bad. In fact, when used correctly, credit cards can actually save you money, especially around the holidays and other peak shopping periods. Here are a few ways you can benefit financially this season by using a credit card.


1. Points and cash back

Most credit cards offer points or rewards programs that give you money back for the things you're already buying. For example, let's say your card offers 2% back on groceries, and you spend $500 a month at the supermarket year-round. That's an extra $10 a month, or $120 a year, in free money.

Not only that, but some credit cards -- particularly store cards -- offer special cardmember discounts, some of which tend to be seasonal. If your favorite retailer is now taking 10% off all purchases for cardholders and you're planning to spend $300 on gifts, you'll slash $30 off your bill just by using your card.

2. Purchase protection

Many credit cards offer purchase protection on the items you buy using your card. This protection typically covers items that are stolen, damaged, or deemed defective in the weeks or months following your purchase. Paying with cash, by contrast, might leave you pretty vulnerable in a similar event.

Keep in mind that not all purchase-protection plans are created equal -- you'll need to consult your credit card agreement to see what specific coverage you're entitled to. For example, while many purchase-protection programs don't come with exclusions, an estimated 40% of cards exclude items that are stolen from vehicles. Also, while the majority of credit cards provide purchase protection for at least 90 days, some programs have a shorter window.

If you happen to have the Citi Prestige, Citi ThankYou Premier, or Chase Sapphire Reserve card, you're probably in luck. According to a recent WalletHub study, these cards offer the best purchase-protection programs for consumers.

3. Extended warranties

Don't you hate it when you buy something pricey and it breaks on you the second its built-in warranty runs out? It's that very fear that prompts 31% of consumers to purchase extended warranties each year at a total estimated cost of more than $1.6 billion. A much better -- and less expensive -- way to extend the warranties on your purchases is to use your credit card. Many cards offer additional warranty services at no extra cost. In fact, almost 35% of credit cards will actually extend an already-generous five-year original manufacturer's warranty.

According to WalletHub, Citigroup Inc. (NYSE:C)and American Express Company (NYSE:AXP)cards offer the best extended warranties out there. If you're a cardholder, you might save hundreds of dollars this holiday season by skipping the store-bought warranties and relying on your credit card instead.

4. Price protection

It happens to all of us: We search high and low for the best possible deals only to be outsmarted by pop-up sales after making our purchases. But if you use a credit card to do your holiday shopping, you won't have to drive yourself nearly as crazy in pursuit of the lowest prices of the season. Many cards offer price protection, which means that, if you find something you bought at a lower price within a certain time frame, your card will refund you the difference.

While some cards offer better price protection than others, an estimated 41% of cards offer this service for the 60-day period following a purchase. Meanwhile, 27% offer price protection for 90 days, while 31% offer it for 120 days. And while 28% of credit cards offering price protection limit you to four claims per year, the majority impose no such limit. According to WalletHub, JP Morgan Chase & Co. (NYSE:JPM) credit cards provide the best price-protection benefits out there.

If you're planning to buy up a storm this holiday season, it pays to see what benefits your credit card has to offer. As long as you stay within your budget and don't rack up debt, using your credit card can be a great way to put some much-needed cash back in your pocket.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.