Knowing the Course
For the amateur, one of the benefits of using a caddy is the caddy's knowledge of the course. A good golf caddy is especially valuable if you are playing a course for the first time. When a caddy knows the right line for your drives, the slopes on the greens and distances to hazards, that information gives you confidence and saves you strokes.
Giving Advice on Shots
Good golf caddies give good advice tailored to your specific style of play. Once a good caddy has seen you play a few holes, he will have a fair idea of when you should be going for a carry and when you should lay up. A good caddy helps with club selection and course management based on your specific game.
On the Greens
If you are visiting a new course, reading the greens can be the hardest thing to do. An experienced caddy will have seen every possible putt on that green several times and be able to advise on line and speed. A good caddy can save you the most shots on the putting surface.
The Mental Side
Good caddies serve as on-course psychologists---boosting a golfer's morale, keeping a golfer's thinking positive and being a friend when one is needed. Many golfers' egos benefit from hearing how good a swing looks, how good the last shot was . . . or even how unlucky it was that that last shot went in the water.