As COVID-19 stimulus deposits are sent out, millions of Americans are at risk of delays because they don’t have bank accounts. The challenge of the “unbanked” is one we’ve grappled with for years, and now it hits home as those consumers are facing delayed relief that many with bank accounts have already received. According to a 2017 study by the FDIC, some 14.1 million Americans don’t have a bank account.
According to Marketwatch, 53% of Americans without bank accounts said they don’t have enough cash to keep an account open, and 30% cited bank account fees as the reason they don’t have an account.
In response to this problem, the Federal Deposit Insurance Corporation (FDIC) has taken steps to help American households without access to bank accounts. They are sharing information about free and low-cost bank accounts with very low minimum deposit requirements, to give all families a place to deposit and save their stimulus funds.
Consumers can check out the FDIC’s “How to Open a Bank Account” video here on YouTube. They’ve also created an online “BankFind Tool” that can help people locate a financial institution near them. Any bank accessed through this tool will be FDIC-insured, so depositors can know their money is safe.
Those who do not establish a bank account will have to wait for paper checks to be mailed, and that delay could stretch from weeks to months depending on the situation.
Using your bank account to accept stimulus payments
Once a bank account is established, consumers should visit the IRS Portal to provide their bank account information. This gives the IRS the ability to securely and safely direct-deposit eligible consumers Economic Impact Payments directly, without the need to wait for a paper check to be mailed.
Tips for Choosing a Bank Account
Aside from being able to deposit a stimulus check or accept a direct deposit, it’s very important to have access to banking in order to establish and grow your savings, and to keep your assets secure. A bank account means you’ll get your IRS refund deposits quicker every year, and get started on the road to financial security.
It’s very important to comparison shop to come up with the best bank or credit union to meet your needs. Those needs should include convenience, clear banking policies, and low costs.
Consider the Convenience
For convenience, a modern bank account should have ample online tools allowing the accountholder to check balances, make bill payments, and access funds electronically.
Check the Bank Policies
Each bank will have policies in place that will be important to understand. For example, how long are deposited funds held until they are available? If fees are triggered, are their waivers for new accountholders or those below a certain income level? Is there a maximum number of withdrawals allowed per month?
Is There a Cost Involved?
Bank fees are a major concern that should be taken seriously. Those new to banking should stick to free and low-cost banking accounts that avoid overdraft and NSF (non-sufficient funds) fees.
Create a budget, watch that bank balance carefully, and always keep a modest minimum balance, even if your bank has no minimum requirement.
The other major problem cited by the unbanked – not having enough money – is the reason it’s so important that the unbanked take this opportunity to start a free or low-cost bank account and establish savings using some of their stimulus funds. The first step to solving the problem of not having money on hand is to establish a bank account so they have a place to safely accumulate savings.
Anyone with questions about the financial impact and relief programs associated with the COVID-19 pandemic should visit our COVID-19 financial guidance and resources page; it is updated frequently with the latest information and links to more resources for anyone affected by the crisis.