You dont need a credit card to be a proper citizen. Its true that they are useful, but its perfectly possible to live without one, and that can sometimes be a better choice than applying for a credit card for bad credit.
If you find it hard to be disciplined about your spending, make impulse purchases on credit, or even use a credit card to pay your essential living expenses (a sure sign youre in trouble), then getting hold of another card may not be your best choice.
At any rate, you should get control of your finances before you apply for one.
Balance your budget
Make a careful list of your income from all sources and your regular outgoings, including all the bills that you pay by direct debit and your fares to work.
Thats the basis for your budget. The amount you have left over after deducting your bills from your income is the most you should spend on food, cleaning materials, and any occasional expenditure needed for Christmas, birthdays and holidays. It should also provide an allowance for emergency repairs or accidents in the home. If the figures dont make sense, then you dont need more credit, you need to get your budget into sustainable shape.
When you look at your income and outgoings objectively, you may decide that some of your direct debits arent as necessary as you thought they were. Shop around for cheaper deals on utilities and phone contracts. Get rid of expensive TV packages. Cancel your gym membership if thats necessary to make the figures add up.
You will feel better and more in control of your life once you know that you are able to live within your means.
Once your budget is balanced, you can concentrate on paying down your debts, starting with any that are charging a high interest rate, and hopefully putting some money regularly into a savings account.
If you cant afford to make payments on your debts, the worst thing you can do is to borrow more, unless you are eligible for a 0 % or very low rate balance transfer card and can realistically hope to pay the debts off within the discount period.
If you cant service your debts, you should get advice about your financial difficulties, which could include making reduced pro rata or token offers to all creditors, or applying for a Debt Relief Order if you are eligible. Start by looking at the CAB self-help advice site, Adviceguide, or the government Money Advice Service site.
Whether or not youre not at the point where you need outside advice, you may still want to try going cold turkey on card borrowing. There are options that can help you do without a credit card for bad credit.
Save for big items
Before the days of easy access to credit, people used to save up for Christmas, birthdays and holidays. Now we are used to spending on credit, and when expenditure isnt controlled by income, it can sky-rocket.
Putting a little aside every month is empowering, and its more pleasurable to buy special items with your savings than use a credit card.
Once your budget is balanced, its a good idea to look at joining a credit union. Some unions require you to put aside a small amount with them regularly, but some do not. Credit Unions are springing up all over the UK to help people access credit for emergencies without having to pay penal interest rates.
For the times that a plastic card is needed, a debit card is nearly always a permissible alternative to a credit card. Thats usually the case for online purchases and subscriptions, and using a current account debit card means that you can take a proper look at your income and outgoings within that account, without giving yourself the opt-out of a credit card account where you can park expenses and pretend theyre not there.
A Pay-Pal account is also a good option for many online purchases. There are normally no fees for buyers, and you get a certain amount of protection by using PayPal for eBay purchases.
Life can go on quite happily without a credit card, and though they are useful for some purposes, its a useful exercise to balance your budget and try to go without card borrowing, at least for a while.
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