Due to the US government passing a $2.2 trillion stimulus package at the end of March, most American adults will be receiving up to $1,200 directly into their bank accounts (if they set up a direct deposit for recent tax returns).
This little financial boost is meant to help strengthen the economy by supporting Americans hit by the sudden economic turmoil.
For some, this will be much-needed relief, for others there's an opportunity to get a bit ahead. Whatever your case, here are things you should and shouldn't do when that check comes.
If you have bills piling up, nows the time to catch up. Rent, phone bills, internet, car payments, and more might be adding up. The stimulus check is meant to help relieve some of these burdens, so don’t be afraid if this becomes the sole focus of your stimulus check.
If you don’t have immediate spending needs, then putting the money away for a rainy day is a great option. A high-yield savings account is the most beneficial, though any savings account is a plus.
If you want, you can get a higher interest rate if you put the money in a CD. Be warned, you won’t be able to touch the money for a while if you do this.
The same principle goes for retirement accounts. These can be great long-term storage solutions, but again you won’t be able to touch the funds in them at all.
If you owe an outstanding balance, now’s a great time to use the stimulus check to pay that down.
Credit cards with their high APR’s should be what you tackle first. In fact, this is a good rule to follow, tackle the highest interest debt first, and work your way down.
$1,200 can go a long way here to make sure you’re not overpaying in interest.
Yes, this is a form of debt, but it deserves a special highlight. Under the stimulus package, federal loan borrowers won’t have to pay their student loans through September 30. Loans will not accrue interest during this time as well.
It’s tempting to ride this wave and hold off on loan payments - but it’s in your favor if you keep paying.
Interest accrues based on the total amount owed. With interest being halted this is a fantastic opportunity to knock out some extra payments and save money in the long run.
As an economic stimulus its meant to stimulate the economy. So that said, you can use a bit of it to help show your support. Being stuck inside can make people feel a bit down, bored, or both.
So it’s okay to take a bit of it to improve your happiness.
Spending some of it is okay. It is meant to help stimulate the economy after all. It’s also meant to help get Americans through these tough times. Things might be fine for you right now, but there’s no guarantee that you won’t need some of that money in the near future.
Getting rid of this safety net entirely while the economy is still rocky is not advised.
Checking accounts have zero or low-interest rates. If you’re not sure what you want to do with the money quite yet, then put it in a savings account.
It doesn’t have to be a CD or a high yield savings account, but if you’re just going to have it sit in an account you might as well earn some interest off of it.
Keep people safe by staying home. Don’t look at the stimulus check and the low airfares as a great vacation opportunity - it’s not. It’s a sign that things are a mess. Most things are closed anyways and all you’re doing is possibly exposing yourself or others to the virus.
Don’t do this.
The IRS stated that most people will receive the funds via direct deposit. You must have requested a direct deposit on your 2018 or 2019 tax return in order for this to happen.
If you opt-out of direct deposits during tax time, you’ll get the funds in the mail.
A timeline of around 3 weeks was given when the stimulus package first was signed. Treasury Secretary Steven Mnuchin went further and said most people will actually receive the funds around April 17.
This is by no means a guarantee. During 2008, stimulus checks took about 12 weeks to reach Americans.
No. You won’t have to pay a single penny. The entire amount is yours.
No. There are a few exceptions and conditions.
Those who have been claimed as a dependent (age 17-24) will not receive any money.
Those who do not have a social security number will not get anything.
You must have filed a tax return in 2018 or 2019. Those who are not required to file a tax return must file a simple tax return in order to receive the payment.
ifferent income brackets will receive different amounts.
If you’re single, you get the full amount if you make less than $75,000 per year. From there until $99,000, you can get a partial amount. The government will subtract $5 for every $100 above $75,000 you earn.
For married couples, the cap for the maximum payment is $150,000 jointly. Partial amounts are given for those that earn up to $198,000.
Households will get an additional $500 for each eligible child under the age of 17.