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Paying for a purchase with a credit card has benefits beyond those discussed in my post on credit scoring. Be aware that these benefits may not apply to a purchase made with a debit card, even if the debit card is used as a credit card at the point of sale.
If you notify your card issuer within a certain time frame, federal law (15 USC 1601) limits your liability for unauthorized charges to your credit card to $50. In practice, Visa and MasterCard both waive the $50 liability. Unfortunately, card issuers do not bear the costs of any unauthorized purchases. Merchants who process transactions that are later discovered to be fraudulent almost always bear the costs, regardless of whether they were aware of the fraud.
Under the same law, you are entitled to dispute charges for certain purchases that are unsatisfactory for certain reasons. The sites listed in the References section below explain the limitations. In many cases, card issuers will also honor disputes other than those required by law. As above, merchants bear the costs of disputes. Most card issuers charge merchants fees when customers dispute charges, regardless of the outcome.
Many credit cards include insurance protection and extension of product warranties. These are often included automatically and at no charge. When I use one of my credit cards to purchase an item with a warranty of 1 year or less, my card issuer automatically doubles the length of the warranty. If my Xbox broke 15 months after I bought it, I could pay for the repair and submit a claim to my credit card company. In this case, the cost is borne by the card company (though they may contract with an insurance company).
Additional resources
Fair Credit Billing reference by the Federal Trade Commission
Guide to handling lost or cards by the FTC
Text of 15 USC 1601 – Fair Credit Billing Act (PDF from FTC)
