Universal Credit Forcing People into Payday Loans


A recent study by the charity Save the Children has found that the changes in Universal Credit payments in the UK has led to many poorer families and parents having to turn towards payday loans in order to cover the cost of childcare. Universal Credit has caused widespread dismay and problems for many people with many different backgrounds and needs in the UK since it was brought in to replace 6 other types of benefit payments in one single monthly payment. The new research shows how thousands of families have been hurt by the new system, with payday loan companies often the only place people can turn to for help with financial matters.

The problem has come from how the new Universal Credit payment system works. For many families with young children there is no choice but to pay upfront for childcare. What this has meant though is that these families now have to wait until the end of the month until the new single lump sum Universal Credit payment is made into their accounts – which reimburses the payment for childcare that they are entitled to. This process has had a significant knock-on effect as families are forced into a position of taking out payday loans to cover the cost of childcare upfront, or to cover the cost of other essentials throughout the month as there is no money left over after childcare costs have been met.

For many young families that have a low income the changes have meant that they are reliant on hand-outs from friends and family members to cover costs, or to ask people to look after children for free whilst the parents are at work. Both of these angles are just not reasonable for many families and it is then that they feel the only place to turn is a payday loans company.

Of course, there are some benefits to applying for instant payday loans. For a starter it does mean you can borrow money in an incredibly quick and secure process. For the most reputable and responsible lenders in the payday loan world you’ll have access to clean and easy to navigate website that outlines the services available and demonstrates exactly how easy it is for you to apply.

All it should take is a few short minutes of your time, allowing you to see exactly how much money you wish to borrow, as well as exactly how much time you would like to pay back the loan. A payday loan is paid back within a month, whilst an instalment loan can be paid back over a longer period of time (but be aware that the interest fees will be higher as a result).

Always make sure that you understand the finer detail of any agreement with instant payday loans, as if you are unable to pay back under the agreed terms you will only find that you are in greater financial difficulty. It is a sad indictment of our country that the Universal Credit system of payments is sending poor families into greater difficulties, but at least there is the knowledge that responsible payday loan lenders can help in the short-term.