What can I do with a Steam credit?

[Gnat]

I bought more credits than I actually needed, is it allowed to, for instance if I see something I like, to pay him the credits for a real life item?

[Ogami]

The only thing you can do with Steam wallet funds is buying stuff on the store.
Thats it. The credits cant be transformed into real money and taken out of Steam and you
also cant give it to another user.
That is also the only kind of transaction Steam supports, everything else falls outside the Steam system and you are on your own if something goes wrong/you get scammed.

[FPS]

Besides Store, you can also buy things at the Community Market. Or just keep them until you see something you want to buy. The wallet funds do not expire over time