Common customer queries about bank accounts

We’ve tried to gather together here some of the questions you’re likely to be asked by customers on Universal Credit in relation to their bank account.

I have no bank account but I’ve been told I need one

Universal Credit is paid directly into a customer’s bank account.

To receive Universal Credit payments, customers will need to have an account that can receive automated payments.

The different options are:

  • current account
  • basic bank account
  • ‘jam jar’ account (or budgeting account)
  • some types of credit union account, and
  • Post Office® card account.

It’s a good idea for the customer to choose an account that allows automated payments out of the account – such as Direct Debits or standing orders – for bills such as rent, gas and electricity.

All of the accounts listed above – except the Post Office® card account – allow the account holder to make outgoing automated payments.

Our video – How to open a bank account – explains to customers how opening an account works, with advice on what to do if they have any problems.

I want to open an account with the least amount of hassle

Some customers may have a poor credit history or be reluctant to apply for any account that requires a credit check. They might be better suited to a basic bank account (or similar) which has no overdraft facility and no credit check.

The standard documents needed to prove a customer’s ID or address might be difficult or expensive for some people to get hold of. Are there any other documents that you are able to accept instead, if a customer doesn’t have either a passport or a driving licence, for example?

All Universal Credit customers will receive an award notification letter at the start of their claim. This letter is recognised as a valid form of ID for the purpose of opening a bank account. However, most banks will require an additional proof of address alongside this letter.

Some customers might need assistance completing the application form.

Our video – How to open a bank account – explains to customers how opening an account works, with advice on what to do if they have any problems.

Do I need a joint account?

If the customer has a partner they will both need to make a joint claim for Universal Credit and they will get a single monthly payment for their household.

They don’t have to have a joint account. They can choose to have their money paid into:

  • a single account in either their name or their partner’s name, or
  • a joint account in both of their names

As a general rule, joint accounts are most suitable for couples who have similar attitudes to money and can budget together and agree a joint spending plan.

However, some couples may choose not to use a joint account.

If someone’s partner has a poor credit history they should be aware that opening a joint account with them will affect their own credit score.

And if a customer is worried about their partner taking control of the money and leaving them without access to cash, they should talk to their Jobcentre Plus. In exceptional circumstances, for example if someone is at risk of abuse, or their partner has a history of addiction, they can be paid separately.

For more information, see our page on Protecting against financial abuse.

I have a bank account but I don’t use it – can I start using it again?

Some customers may have opened an account in the past but stopped using it.

If the customer is able to trace and reactivate the account, they will need to check whether it is suitable for receiving their Universal Credit payments.

Even if the account is suitable for receiving payments, it would be useful to discuss the customer’s requirements for an account and the different options available. It may be that they would be better off with a different type of account, for example one with lower charges, or without an overdraft facility.

If the account has outstanding debts or an overdraft then you may need to speak to the customer about setting up an appropriate repayment plan.

What’s the best way to pay household bills?

Universal Credit is paid monthly and includes an amount of money to pay for (or help with) the customer’s rent or mortgage. Because of this, many customers are being encouraged to start paying their rent and other bills by Direct Debit or standing order.

Some customers might not be familiar with Direct Debits so you may need to explain how they work and point out that they are free to set up and might even save the customer money, for example if there’s a reduced tariff for paying by Direct Debit.

Other customers may be wary of Direct Debits because they feel they will lose control over their money or because they have previously incurred bank charges as a result of refused Direct Debits.

Our video – How to make payments using your bank account – helps customers understand the difference between Direct Debits and standing orders and how to use them effectively.

For customers who are need help managing their own rent money, our video – Worried about paying your rent? – provides advice on how best to manage rent payments as well as tips on making up shortfalls and avoiding arrears.

How do I set up my account to make managing my money easier?

Some customers might need help with basic budgeting skills, while others will be expert at budgeting, but won’t be used to doing it on a monthly basis. Most customers will be keen to stay on top of their bills and out of debt.

The customer might benefit from keeping money for bills separate from money for spending. They might be able to do that in a number of ways, including:

  • Opening a separate account just for rent and other essential bills. They could set up a standing order each month into this account and all their Direct Debits could be timed to come out as soon as the money is transferred.
  • Using a prepaid card alongside their bank account. The money for bills stays in the account untouched and the rest is transferred onto a prepaid card which can be used for general spending.
  • Using a specialist ‘jam jar’ or budgeting account to separate their money into ‘jars’ for rent, other bills and general spending.

Our video – How to use your bank account to make budgeting easier – helps customers to manage their bank account and prioritise the payment of priority bills.

How do I avoid bank fees and charges?

Some customers, especially those who are new to banking or have had negative experiences in the past, will be wary of incurring fees and other charges.

You should explain the different types of fees and charges so that the customer is clear about which banking activities are free and which ones incur charges, for example:

  • Interest and fees on overdrafts. If the customer stays in credit, or has an account without an overdraft facility, they will be able to avoid these.
  • Bank charges for Direct Debits. Paying bills by Direct Debit is free as long as there is enough money in the customer’s account to cover the payment. The customer can avoid bank charges for refused Direct Debits by budgeting carefully and keeping track of what payments need to go out of their account and when.
  • Fees for withdrawing money from a cash machine. Although most cash machines are free to use, there are some – especially those inside convenience stores – that can charge for withdrawals. The customer will always get a warning if they are going to be charged.

How can I keep an eye on my account and check my balance?

If the customer has access to the internet they will probably want to sign up for online or mobile banking services so that they can check their statement at any time of day or night.

Alternatively, they might be able to use telephone banking to check their balance or order a mini statement from a cashpoint machine.