Money saving

How claiming Universal Credit could push you into debt

Posted 09 February 2017

Find out which debt solution is right for you

Get started

Answer a few simple questions

See if you are suitable

Understand your next steps

Make sure the wait for the first payment doesn’t affect you.

If you’re looking to claim Universal Credit, it’s likely to be because you’re out of work. Because of this, you might also find it difficult to afford all of your bills.

And the way that Universal Credit works means you’ll wait at least six weeks before you even get your first payment. According to some landlords and politicians, this can cause claimants to turn to food banks and be forced to borrow money just to get by.

It can be scary to go through this situation, especially if you don’t know what help is available. Don’t worry – we’ll take you through what this could mean for you.

The six-week wait

The reason you’ll have to wait six weeks before you get your first Universal Credit payment is because you initially can’t claim the benefit for seven days. You’ll then have to wait a further month while you go through an assessment period to see if you’re eligible for Universal Credit.

And depending on your council, your claim could take even longer due to administrative delays. For example, Croydon council in London says claimants often have to wait around 60 days before they get any Universal Credit money. This could be down to the high numbers of people applying for benefits and causing a backlog.

Find my solution

Can it push you into debt?

According to research from The Guardian, local MPs regularly refer families who can’t cope with the wait for a first payment to food banks. And some private landlords are even turning down benefits claimants as they think they’re more likely to get into arrears. In 2010, almost half of private landlords would accept tenants on benefits. Now, that number is less than one in five.

From this, it’s easy to see how you could get into debt when you move to Universal Credit. If you’ve not saved any money from your last paycheque and you hadn’t budgeted for having to wait six weeks to get your first Universal Credit, you might find this time difficult. You could be tempted to borrow just to make ends meet. And if you take out high-cost, short-term credit like a payday loan, you could struggle to pay this off when your payment does finally arrive.

If you previously got your wages weekly or fortnightly, you might find it difficult to adjust when you move to Universal Credit. That’s because you get the benefit once a month. Universal Credit will streamline six existing benefits – Jobseeker's Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Employment and Support Allowance and Income Support. This will supposedly be easier to understand for claimants but it can mean you go for a few weeks without getting any money.

Will it affect you?

Universal Credit hasn’t rolled out to all areas of the UK yet. Due to various delays, the rollout now won’t actually complete until 2022.

This means that Universal Credit might not exist in your area yet. So depending on your situation, if you need to claim now, you might get the relevant benefits we talked about above instead. You can see if you qualify for Universal Credit at your jobcentre on the website.

If you’re already struggling with debt repayments, having to wait for your first Universal Credit payment might be really difficult. But you don’t have to cope with this alone – the longer you do nothing about it, the more interest and charges could build up.

You can get free and confidential advice about how to cope with your problem debt from the Money Advice Service and a number of debt charities, and you can also get in touch with our debt advisors to talk about the options available to you. Scroll down to see how you can contact them today.

by Emily Bancroft

Back to blog home

Did you find this useful? Share it with others!

To find other sources of free advice visit Money Helper. It’s here to listen and give free, impartial, trusted guidance. Based around you and backed by government.