Brits struggling on Universal Credit can get a loan to cover unforeseen costs in the new year.
Applicants can claim the money worth up to Â£ 812 – but will need to plan to pay it back in the next few months.
The budget advance is designed to help cover emergencies and other costs that arise when you are on universal credit.
What is a budget advance?
You can borrow from Â£ 100 and up to Â£ 812 if you are a household with children, but you should only apply for what you need.
The money could help you cover a one-time cost, like replacing a broken refrigerator or moving expenses or a rent deposit.
While this can help you cover larger costs in the short term if you don’t have savings to fall back on, you will still have to pay back the money in the long term.
The amount you borrow will usually be repaid over 12 months, so the amount of benefits you will receive in subsequent months will be less.
If you stop getting universal credit, you will need to agree to another way to repay the loan.
However, you will only repay the borrowed amount because the loan is interest free.
You can request a budget advance to cover items such as:
- A one-time item – for example, replacing a broken refrigerator
- Work-related expenses – for example, the purchase of uniforms or tools
- Unexpected expenses
- Repairs at your home
- Trip costs
- Maternity expenses
- Funeral expenses
- Moving expenses or rental deposit
- Essentials, like clothes
It’s worth checking first if there is any other aid you can get that you don’t have to pay back.
For example, you may qualify for vouchers, grants, or cash through your local council’s Household Support Fund.
What are my other options for emergency money?
If you are having trouble and need money to cover occasional expenses or for the expenses of daily living, be sure to check these options out before requesting an advance.
First of all, it’s worth checking that you get all the benefits you are entitled to – you can use a benefit calculator to check.
In addition to the Household Support Fund, municipalities have other social assistance funds to distribute.
Different emergency funding is available depending on where you live in the UK, so you will need to contact your council for more information.
You can also apply for some charitable grants if you find yourself in financial difficulty.
Turn2Us is a charity that helps people in financial difficulty access grants and support services.
You can ask to borrow money from your family or friends, but remember that you will also have to repay this money.
Be clear with them about what you’re going to pay back when you’re on the same page, as disagreements can often arise when it comes to money.
Borrowing money through a budget advance is interest free, and if you borrow through a loan or credit card, you will usually have to pay interest.
But you may be able to get an interest free credit card.
You will need to verify your eligibility and make the minimum repayments each month, and repay the full amount before the end of the interest-free period.
Otherwise, you will pay more back on top of what you borrow, and interest rates after the zero period ends can reach 20%.
You should check the interest rates to make sure you’re getting the best deal using comparison websites like Uswitch or MoneySuperMarket.
The best rates, however, are generally only available to those with a perfect credit score. To check if you are eligible for the cards with the best rates, MoneySavingExpert has a credit card eligibility calculator that you can use.
If your credit score is not good, you might consider getting a loan from a credit union.
These are local organizations where members pool their savings to lend to each other, often enabling them to offer products at low cost.
If you are concerned about debt, there are a number of organizations you can get free and friendly advice:
How much can I get with a budget advance?
You can borrow a minimum of Â£ 100 via the budget advance and the maximum depends on your needs and circumstances.
- Up to Â£ 348 if you’re single
- Up to Â£ 464 if you’re a couple
- Up to Â£ 812 if you have children
However, you won’t be able to borrow money if you have a certain amount of savings.
For any savings over Â£ 1,000, your loan amount will be reduced by Â£ 1 for every Â£ 1 you have more.
If you have cash on hand, it’s often better than borrowing money.
Who is eligible for a budget advance?
You can apply for the budget advance if you have universal credit and a number of other benefits according to Citizens Advice, including:
- means-tested jobseeker’s allowance,
- Means-tested employment and support allowance
- Income support
- Pension credit
You will need to have applied for benefits for at least six months to apply for a budget advance, unless it is to cover work-related or job-retention costs, such as travel.
You will also need to have earned less than Â£ 2,600 in the six months prior to your application, or Â£ 3,600 if you live with a partner.
If you have already taken out a budget advance and are still paying it back, you will not be able to get the loan.
How to request a budget advance?
If you think a budget advance is the best option, you should call to apply.
The Universal Credit helpline is 0800 328 5644 and calls are free from landlines and mobiles.
You can also contact your local Job Center Plus or through your Universal Credit online account.
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