To get Universal Credit and other benefits, you’ll need a bank or building society current account, or an account with an alternative provider – such as a credit union. The account must allow you to make and receive automated payments.
What’s in this guide
- Which accounts can receive benefit payments?
- Setting up payments for rent and other bills
- What does each account offer?
- Current accounts
- Fee-free basic bank accounts
- Prepaid cards
- Choosing the best bank account for your needs
- Joint or single account?
- Opening your bank account and setting up bill payments
Which accounts can receive benefit payments?
Money Manager tool for Universal Credit
Make the most of your Universal Credit payment with personalised help from our Money Manager tool.
You’ll need an account that can receive automated payments.
The options are:
- current account
- basic bank account
- prepaid card.
If you’re unable to open any of these accounts, contact the office responsible for paying your benefit to find out how you can get your benefit paid to you.
If you’re renting from a social landlord, check whether they recommend a particular account. If so, you don’t have to use it – but some landlords will pay you an incentive if you do.
Setting up payments for rent and other bills
Ideally, your account should also allow you to make automated payments out of the account. For example, Direct Debits or standing orders for bills such as rent, gas and electricity.
Only these accounts allow you to make outgoing automated payments:
- current account
- basic bank account.
Some prepaid cards don’t allow you to make outgoing automated payments.
Find out more in our guide Direct Debits and standing orders
What does each account offer?
| Services and features | Current account | Basic bank account | Prepaid card |
|---|---|---|---|
|
Accepts Universal Credit and other benefit payments |
Yes |
Yes |
Yes |
|
Accepts other forms of income, such as wages |
Yes |
Yes |
Yes |
|
Allows Direct Debits and standing orders |
Yes |
Yes |
Not always - check with the provider. |
|
Overdraft facility |
Yes |
No |
No |
|
Cash card with PIN for cash machine |
Yes |
Yes |
Yes, although you might be charged. |
|
Debit card |
Yes |
Sometimes |
Most prepaid cards can be used in all the same places as a debit card. |
|
Cheque book |
Yes |
No |
No |
|
Credit checks needed when you open the account |
Yes |
No |
No |
|
Fees and charges |
Fees and interest on overdrafts. Charges for refused Direct Debits. |
No fees |
Charges vary. Can include fees for set-up, to top up, and for withdrawing cash. |
Compare bank account fees and charges
To see all the fees and charges that apply to bank accounts – showing everything from overdraft fees to foreign cash withdrawal charges – use our comparison tool.
Current accounts
Most people use a current account to manage their day-to-day money.
This is because a current account doesn’t have any of the restrictions of a prepaid card.
Current accounts are offered by banks, building societies and some credit unions.
Bank and building society current accounts
- They have all the features you might need, such as automated payments, cash cards, debit cards, Direct Debits and cheques.
- You can access most current accounts through a high street branch, online, using mobile banking or over the phone.
- You can get regular statements to help you keep track of your money.
- Some accounts charge high fees and interest if you go overdrawn. And most have bank charges if there’s not enough in your account to cover a Direct Debit or standing order.
Find out more in our guide Current accounts
Credit union current accounts
If you’re having trouble getting accepted for a current account with a bank or building society, you might want to try a credit union.
You won’t need to pass a credit check to get a credit union current account. This is because these accounts don’t usually offer overdrafts.
Credit union current accounts can sometimes charge an administration fee of £5 to £10 a month, especially if they offer budgeting advice.
Find out more in our guide Credit union current accounts
Fee-free basic bank accounts
If you don’t have access to a standard bank account, a fee-free basic bank account can make it much easier to manage your money.
These accounts don’t have an overdraft facility. So you won’t be able to get into debt by spending more than you have.
Find out more in our guide Fee-free basic bank accounts
Prepaid cards
It’s possible to have your benefits transferred onto a prepaid card. But there are a few things you need to be aware of before going ahead:
- Prepaid cards come with a variety of charges. You’ll need to check with the provider before you buy.
- Having all your money on one card doesn’t allow you to keep your money for bills separate from your money for spending.
- Not all prepaid cards allow you to set up automated bill payments for your rent, gas or electricity. This can mean having to withdraw large sums of cash each time a bill needs to be paid.
But they do have some advantages:
- You can’t get into debt as there’s no overdraft facility on a prepaid card.
- It’s possible to make one-off electronic bill payments with some prepaid cards. This gives you control over when the payment is made.
One way of using a prepaid card is to use it alongside a bank account.
You leave enough money to cover your rent and other bills in your account, and load all of your spending money onto the prepaid card.
This gives you control over how much you spend. And it means you avoid bank charges and penalties on your account for returned standing orders or Direct Debits.
Choosing the best bank account for your needs
Comparison websites are a good starting point if you’re trying to find a current account or basic bank account that’s right for your needs.
Here are a few websites that compare current accounts:
- MoneySavingExpert
- Which? You can use their quality rating to find the banks with the best customer score.
In Northern Ireland, you can also try the comparison tool on The Consumer Council website
Be aware that comparison websites won’t all give you the same results. So make sure you use more than one site before making a decision.
It’s also important to do some research into the type of product and features you need your bank account to offer.
Learn more in our guide to finding the best deals on comparison sites
Joint or single account?
If you’re married or living together, you’ll get a single Universal Credit payment for your household.
You’ll be asked to nominate which bank account you want to have your money paid into. This can be:
- a joint account in both of your names
- a single account in either your name or your partner’s name.
Find out more about the pros and cons of joint accounts and managing your money as a couple in our guide Joint Universal Credit claims for couples
Opening your bank account and setting up bill payments
Customers can now switch their current account in seven working days.
