Because we live in a society where spending is addictive and easy to overdo, it is essential that you understand what people with bad credit MUST do with credit cards.
In our consumerist society almost everybody confuses need with want. They believe, due to advertising, peer pressure and society in general, that there is an endless array of objects, items and experiences that they MUST have in order to function and to be good enough. This urge to splurge is unfortunately addictive. There are many people who make impulse buys and then regret them later. There are people who buy items that they believe that they desperately need and then never use them. There is a huge group of people who cannot help themselves when something that they do not need is on sale. These people are at risk of overdoing their spending and getting themselves into financial trouble.
Getting into financial difficulty
One of the most serious and dangerous places to find yourself is in over your head with debt. It is easy enough to get there will loans and credit cards so easily available and the world constantly telling you to buy! Buy! Buy! But it is essential to try to avoid it if possible. If you reach a place where you cannot make your payments on your debts, you should immediately get help. Asking for advice and help from friends and family to get your debt under control is a good first step, but should things feel like they are getting out of hand, seeing a debt counsellor or applying for the debt review process is essential.
What is the debt review process?
If you have debt and are unable to make your loan or credit card repayments, you could apply for the debt review process. If your application is accepted, a debt review counsellor will negotiate with your creditors on your behalf and establish a pay back system that you can afford. The debt counsellor will also ensure that you have enough left after the debt payments to cover your essential living costs. They will give you advice on how to manage your money better going forward. However, if you have had legal action taken against you for outstanding payments, it is generally too late to apply for the debt review process.
Having a bad credit record
If you have had trouble repaying loans and other debt and if you have had legal action of some sort taken against you, you will have a bad credit record. Having a bad credit history means that in future creditors might not be willing to lend you money or let you open accounts. Getting a cell phone contract could be difficult and getting a loan for a house or vehicle could be impossible. Once you have a bad credit record, you should work at trying to improve it by paying off all your debt, not accruing any more debt, and keeping careful control of your financial situation. It is essential that you close all accounts at clothing stores and the like and you do not live beyond your means. If you keep spending on credit and if you cannot pay, you might be blacklisted which will make life incredibly difficult. Once you are blacklisted you will either have to live out the blacklist period making do without credit, or pay for early release so that you can have a clean slate. Once you have a clean slate however, you will have to start growing you credit history all over again because most money lenders want their clients to have a good credit history.
What people with bad credit MUST do with credit cards
If you still have a credit card and if you are still using it once you have bad credit, you should think twice. Accruing yet more debt once you have had financial trouble is a bad idea. The best thing to do is to either not use your credit card at all and get rid of it, or to use it only for emergencies.