14 million Americans risk major delays in their stimulus checks — should they use Square, PayPal or a bank account?

The Federal Deposit Insurance Corporation is making a push to get some 14.1 million Americans bank accounts so they can get stimulus checks faster.

The federal government is sending stimulus checks to millions of Americans as the country weathers the pandemic’s economic fallout, but for some, those checks will be delayed because they are “unbanked,” meaning they don’t have bank accounts.


People who don’t have bank accounts may have to wait weeks or even months longer while the agency cuts them a paper check and mails it to them.

The Internal Revenue Service is sending $1,200 payments to individuals with adjusted annual gross income below $75,000 and $2,400 to married couples who file jointly and earn under $150,000. The amount of money falls above those income thresholds. The government will also pay $500 per qualifying child.

The IRS has paid out $157.9 billion in 88 million stimulus checks, representing just over half of all money due to be sent out, and most have been deposited electronically into people’s bank accounts using account information that the agency has on file for taxpayers.

People who don’t have bank accounts may have to wait weeks or even months longer while the agency cuts them a paper check and mails it to them. Then to cash the check, they will have to leave their homes to go to a bank or check-cashing business and pay a fee to receive the money.

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But unbanked individuals could avoid that delay and hassle, FDIC officials say, by opening a bank account with a couple of clicks or taps on a mobile device.

Roughly 6.5% of U.S. households — made up of 14.1 million adults and 6.4 million children — were unbanked as of 2017, the last time the FDIC conducted a study on America’s unbanked.

“Unbanked and underbanked rates were higher among lower-income households, less-educated households, younger households, black and Hispanic households, working-age disabled households, and households with volatile income,” the FDIC found.


PayPal and Square’s Cash App enable users to obtain a routing and account number to get their stimulus checks directly deposited by the IRS.

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and Square’s
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Cash App, two peer-to-peer payment apps, also enable users to obtain a routing and account number, which allows them to get their stimulus checks directly deposited by the IRS.

Unlike traditional banks such as Citibank
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and others, the FDIC doesn’t insure money deposited into these accounts. That is especially important when it comes to fraud, which has been on the rise amid the coronavirus pandemic.

“We’ve already seen anecdotal cases of people impersonating consumers and getting [their stimulus] checks,” said Leonard Chanin, a top advisor to Jelena McWilliams, chairman of the FDIC.

“Customer funds held in Cash App are safe, secure and accessible given our relationships with partner financial institutions. We are working to offer direct FDIC insurance as a feature for Cash App customers in the future,” said Katie Dally, spokeswoman for Square.

(PayPal did not respond to multiple requests for comment.)

One of the benefits of having a bank account is that you have consumer protection rights. The rights ensure that “if you are not the person who took the money out when it was deposited than you’ll be made whole in terms of the loss of those funds,” Chanin said.

See also: 10 million U.S. families don’t use a bank — here’s what it costs them

Establishing a banking relationship is also “a pathway to additional products and services that you may want down the road,” Chanin said. “Be it a credit card or car loan or mortgage line,” having the relationships, he said, “can really help you get access to other products and services that some other products may not have.”

Naomi Camper, the ABA’s chief policy officer, said consumers should have the option of receiving their stimulus checks more quickly through the two apps. However, she considers these short-term solutions. “Long-term banking goes beyond setting up a payment bank account.”


The FDIC joined forces with the American Bankers Association and BankOn to compile a list of banks that would enable Americans to open up a banking account from home.

Some 53% of unbanked Americans said they don’t have a bank account because they “do not have enough money to keep in an account, and 30% said that “bank account fees are too high.”

The FDIC joined forces with the American Bankers Association and BankOn, a nonprofit run by the Cities for Financial Empowerment Fund, to compile a list of banks that would enable Americans to open up a banking account at home at little or no cost.

“When we saw the CARES Act legislation and recognized that there was going to be a million consumers who were likely to receive a paper check, we tried to think through, are there strategies right now that we can employ that would help consumers get access to a bank account without having to go into a bank branch?” said Mark Pearce, who directs FDIC’s Division of Consumer Protection.

BankOn’s list is much more limited because it only includes banks that fit BankOn’s standards. Some of these standards include “having a minimum opening deposit and/or account balance $25 or less” and “free and unrestricted” customer service. As it stands, 10 banks satisfy these standards.

Camper says it’s important for underbanked or unbanked consumers to begin a relationship with a bank “to use this as an opportunity to build credit so they can eventually get a loan if they need it.”

Jonathan Mintz, CEO of the CFE Fund, which oversees the BankOn initiative, says that he hopes the joint effort to get Americans banked so that they can receive their stimulus checks will make a lasting difference. “This is about stabilizing finances,” Mintz said.

Citing a 2017 study published by the CFE Fund, he said, “people who have a bank account are a half more likely to save money and a third more likely to improve their credit score as a result.”

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