Stimulus payments are being issued, but for many unbanked individuals it could mean months of unnecessary delay before receiving their payment.
By Sydney Lipton, junior policy associate and Brian Rakovitis, manager of financial empowerment initiatives
The Federal government recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act and is disbursing economic impact payments (sometimes referred to as stimulus checks) to provide financial relief to individuals and families during the COVID-19 pandemic. With more than 10% of the American workforce unemployed, it’s important to ensure those who need it most receive their payments as soon as possible.
Unbanked households who do not have direct deposit information on file with the IRS may not see their checks for up to 20 weeks. This will pose a considerable issue for thousands of Michigan families.
Low-income households making $30,000 or less consist of the largest portion of the unbanked population of Michigan. This means that the households that need their stimulus check the most, may have to wait months before getting their payment.
More than half of unbanked households in the US claimed that they didn’t have enough money to hold an account and about 24 percent of Americans believe that account fees are too high.
Additionally, unbanked and underbanked households are more likely to fall prey to predatory financial services with high service fees, leaving less money in their pockets. Households without bank accounts end up having to spend a significant amount of money on these financial services when most people with bank accounts pay little to nothing. Unbanked individuals do not have a formal way to save money for crises like the current pandemic.
But safe and affordable solutions do exist, and nonprofits, community foundations and city leaders can take action and help their community members get banked and receive their stimulus checks quickly:
Nonprofits, community foundations & city leaders:
- See if your community is part of a BankOn Coalition or in an FDIC Alliance for Economic Inclusion service area. Reach out and see how you can help!
- Share these resources to help your residents and clients get their stimulus checks quickly:
What unbanked individuals need to do to receive their stimulus payments:
- Open a bank account. Check out these safe and affordable certified BankOn accounts that can be opened online.
- Get their account and routing numbers
- File their taxes for free using the IRS Free File Alliance or for non-filers, use this new IRS tool. (Not sure which one to complete? Check out CEDAM’s blog for more information)
- They should expect a refund and stimulus check in just a few weeks.