Short-term financial advances on a low income

An advance is money you receive now that is taken back from income you are already due: your next benefit payment, your next wage, or a future instalment of an award. For someone on a low income, an advance can bridge a gap of a few days or weeks without the cost of a commercial loan. But because it is repaid from the same income you rely on to live, it can also leave the following month even tighter.

This page looks at the short-term advances available in the UK, from interest-free benefit advances to employer salary advances and wage-access apps, and compares them with payday loans so you can see which one fits your situation.

Advances on Universal Credit

The Department for Work and Pensions offers several types of advance to Universal Credit claimants. They are interest-free, but they are deducted from your later payments.

New claim advance

Universal Credit is paid monthly in arrears, so the first payment normally arrives around five weeks after you claim. If you cannot manage until then, you can ask for an advance of part or all of your expected first payment, through your online journal, by phone or at the Jobcentre. Repayments are spread over a number of months.

Change of circumstances advance

If your award is going up, for example after a new baby or a change in your health, but you cannot wait for the increase, you can ask for an advance on the extra amount.

Budgeting Advance

This is for one-off costs such as replacing a broken cooker, rent in advance for a new home, or costs linked to starting a job. You usually need to have been claiming for a period of time and your earnings must be below a set level, though there are exceptions for job-related costs.

Advances on older benefits and Pension Credit

If you claim legacy benefits and are waiting for a payment to be decided, you may be able to ask for a short-term benefit advance. People who have received Pension Credit, Income Support, income-based Jobseeker's Allowance or income-related Employment and Support Allowance for at least six months can apply for a Budgeting Loan, which is also interest-free and repaid from benefits.

Before taking any benefit advance, check you are on the right award. A benefits check can reveal missing entitlements worth more than the advance itself. See our page on borrowing while you claim benefits for how repayments interact with your award.

How much to ask for

Because repayments come out of future payments, ask only for what you genuinely need. A useful check:

• write down exactly what the money is for and the cost of each item;
• work out your income for the next few months after the deduction;
• make sure rent, council tax, energy and food are still covered;
• ask the DWP how much will be deducted each month and for how long;
• if deductions are already high, ask whether repayments can be lowered or paused because of hardship.

Salary advances from an employer

Some employers will pay part of your wages early in an emergency, either informally or through a staff hardship scheme. This is usually the cheapest advance after benefit advances, because there is often no charge at all. Ask your manager, payroll or HR department, and get the repayment arrangement in writing so you know how much will be taken from which payslip. If you are on a zero-hours or part-time contract, check what happens if your hours fall before the advance is repaid.

Earned wage access apps

A growing number of employers offer apps that let staff draw down wages they have already earned before payday. There is often a flat fee per withdrawal rather than interest. Points to check:

• the fee per withdrawal, and how many times a month you are likely to use it;
• whether the service is offered through your employer or is a separate app;
• whether early withdrawals will leave your main payday too small to cover rent;
• whether the provider is authorised by the Financial Conduct Authority for any services it offers.

Small fees can add up if you draw down every week, and regular use is a sign that your income does not cover your costs. In that case a benefits check or budgeting help may do more good.

Payday loans: how they compare

Payday loans are high-cost short-term credit, not advances. Since 2015 the FCA has capped their cost: interest and fees cannot exceed 0.8% a day of the amount borrowed, default fees are capped at £15, and you should never repay more than double what you borrowed in total. Even so, the APR is very high, and repeat borrowing is common.

Compare by the total repayable in pounds, not just the headline figure. If a benefit advance, an employer advance or a no-interest loan is available, it will almost always cost less. If you are thinking about a payday loan because a bill is due tomorrow, read our guide to borrowing when money is needed urgently first.

Scams that target people waiting for money

People waiting for a first Universal Credit payment are a known target. Be wary of:

• anyone offering to "get your advance faster" in return for a fee or your login details;
• messages on social media claiming to come from the DWP or a lender;
• "guaranteed" loans that require an upfront payment;
• requests to share your Government Gateway or Universal Credit account details.

Advances from the DWP are free to apply for and are only requested through official channels. Never give your account details to a third party.

When advances stop working

If every month starts with deductions for previous advances, the cycle needs breaking rather than extending. Free debt advice services such as Citizens Advice, StepChange, National Debtline and MoneyHelper can help you review deductions, deal with arrears and plan a budget. For immediate needs such as food or energy, see our guide to emergency financial help, which covers grants and vouchers that do not have to be repaid.