Getting an overdraft while on benefits

Hi,
I let my authorised overdraft facility lapse with my bank, and now they won't let me have any overdraft as I'm not employed or retired. Ditto credit card.

I don't want to get into debt but wanted a back-up in case bills go out before payments in anytime.

I receive Contribution-based ESA, PIP and Universal Credit for myself plus two kids which means quite a lot of money been going into the account for many years, but apparently that's irrelevant.

Does anyone which banks will give overdrafts to people reliant solely on benefits/UC?

Thanks!

Hi Avalanche78, I don't know about banks, but have you heard of Credit Unions? if there is one in your area, it is a good thing to join. Usually the idea is that you save regularly. It can be a very small amount but you show self-control and reliability by keeping it up. Then say your washing machine breaks, they will give you a loan very cheaply as you have shown you are likely to keep up the repayments. Many are run using volunteers which keeps their costs down.
Hope this may be of help,
Denby

Hi Avalanche78,

I would advise that you sign up free to Credit Karma UK, Clearscore, MSE Credit Club, TotallyMoney etc to check your credit score/file. They will also show you which cards you may be eligible for but always check the particular card’s own eligibility checker first. It prevents you from applying and getting declined, affecting your credit score.

There are a few cards that accept disabled people or those on benefits. You may be eligible for Barclaycard Forward, Zable, Tesco Foundation card etc. Check their own eligibility checkers where you input your details including your income (UC/PIP), occupation ‘Homemaker’, ‘Unemployed’ or ‘On Benefits’ which is an option you can select for some cards.

Credit card companies look at your credit file which gives them information about whether you are a Homeowner, if you’ve missed any payments in the last 6 years, had a CCJ, gone bankrupt, duration of your bank accounts/bills, electron roll etc to make a decision.

Please only apply for cards that have the lowest interest rates and try to clear the balance as soon as you can so you don’t end up in a debt spiral. You may only be eligible for cards with higher interest rates so please be careful.

With overdrafts the criteria is very different e.g. I was given £4,800 limit by HSBC in 2016. They lowered it to £2,000 two years ago and to £250 a few months ago because I wasn't using it. I've been with HSBC for 22 years. Bank’s lending criteria is different to credit cards i.e. Barclays Bank is different to Barclaycard Forward.

I hope the above helps, do ask any more questions and like you said credit cards are for emergencies only and if you can afford to pay back the money.

Best wishes,

Josh

Hi

I get ESA and PIP but found that i had no credit rating at all. My bank for 30 years (Lloyds) wouldn’t give me a credit card so i could build my credit rating. Although i have got a £250 overdraft. I just used the app and there was a tool to choose overdraft amount and it tells you as you are increasing the amount whether you will get it or not.

I applied for a vanquis card which i got with a credit limit of £500. Not really necessary but i also applied for a post office capital one card and got that as well with a limit of £750.

My credit rating is now up above 900. So they have been useful in that regard.

I’m not sure if you are supposed to give your benefits as income but i did. Strictly speaking it is income so why not?

Regards.

Mark