Credit cards have been getting easier and easier to obtain in recent years. From pre-approvals to lowered minimum annual income, everyone is armed and ready to consume with their very own (or ten) credit cards.

Most certainly it is a lucrative business for credit card companies. Defaulters pay an average of 24% per annum in interest and this starts compounding immediately after you sign the dotted line on a purchase. When you do pay your bill in full, you don't pay the interest. But if you pay just the minimum or worse, don't pay at all, the interest starts compounding.

The opportunistic, like myself, claim the free sign-up gifts, pay on time and in full, maximising the 21 days interest free credit (yay 21 days more interest on my money in my savings account), and don't hesitate to call and cancel the card after. Most companies will offer to waive the annual fee as it is easier and cheaper for them to retain an existing customer than acquire a new one.

If you have unfortunately sunk into debt, no worries. Have a plan and you'll eventually dig yourself out of it. Your goal is to pay your debt off as quickly as possible (remember the compounding interest growing exponentially daily?) and minimising the interest you're paying off at the moment.

In the meantime, use 0% credit cards to pay your bills (check the terms and conditions on full repayment and cancellation of card) and utilise 0% balance transfers to stop your debt from growing.

So are credit cards really a bane or boon? Well, it really depends on you.

This post was kindly sponsored by Credit Cards 2 Go 4.

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