The word (always grammatically plural) is usually translated “household gods.” This is accurate in a general sense, but more specifically, the teraphim were figurines representing deified ancestors.

The use of teraphim for divination is explicit in many texts. In Ezekiel 21, for instance, the king of Babylon is said to engage in divination in several ways, including inquiring of the teraphim.

From “Women’s Divination in Biblical Literature” - Esther Hamori

Ezekial 21:21 For the king of Babylon will stop at the fork in the road, at the junction of the two roads, to seek an omen: He will cast lots with arrows, he will consult his idols, he will examine the liver.

Zechariah 10:2 The idols speak deceitfully, diviners see visions that lie, they tell dreams that are false.

Genesis 30:27 But Laban said to him, 'If I have found favor in your eyes, please stay. I have learned by divination that the Lord has blessed me because of you.’

Genesis 31:19 Then Laban had gone to shear his sheep, Rachel stole her father’s household gods.

Genesis 31:34 Now Rachel had taken the household gods and put them inside her camel’s saddle and was sitting on them. Laban searched through everything in the tent but found nothing. Rachel said to her father, “Don’t be angry, my lord, that I cannot stand up in your presence; I’m having my period.” So he searched but could not find the household gods.

A reasonable default assumption is that Rachel’s desire to hold on to her family’s teraphim was not merely adesire to have the objects, but also to use them. Since they were primarily associated with divination, it seems most likely that she took the teraphim so she could utilize them for this purpose.

From “Women’s Divination in Biblical Literature” - Esther Hamori

Judges 17:5 Now this man Micah had a shrine, and he made an ephod and some household gods and installed one of his sons as his priest.

Judges 18:18-20 Now When the five men went into Micah’s house and took the idol, the ephod and the household gods, the priest said to them, “What are you doing?”

They answered him, “Be quiet! Don’t say a word. Come with us, and be our father and priest. Isn’t it better that you serve a tribe and clan in Israel as priest rather than just one man’s household?” The priest was very pleased. He took the ephod, the household gods and the idol and went along with the people.