Avoid check cashing fees with secure and affordable banking options

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Check-cashing services fees diverted $ 66 million from the first round of stimulus money Americans received last year to help weather financial turmoil caused by the global pandemic.

Most Americans received $ 1,200 when Congress passed the CARES or Coronavirus Aid, Relief, and Economic Security Act.

Corn a report speak Financial health network an estimated 10% of recipients who received paper checks – instead of direct deposit – turned to a retailer such as Walmart or a check cashing company for the money. The February 2021 report was released by the Brooking Institution, a Washington DC-based research group that focuses on economics and public policy.

A Milwaukee-based program wants to prevent this from happening again with the expanded child tax credit payments the federal government started sending last month, which can reach $ 300 per month per child.

Betting on Greater Milwaukee works to connect residents with financial institutions that offer low cost bank accounts. The goal is to ensure low to middle income families have a safe and affordable way to get payments without paying check cashing fees, which can range from $ 10 to $ 120.

“Everyone needs all of their money, but when you have limited (income) you need it even more,” said Constance Alberts, program manager at Bank On Greater Milwaukee, a branch of Urban Economic Development Association of Wisconsin.

The expanded child tax credit, which experts say will cut child poverty in half, is part of President Joe Biden’s $ 1.9 trillion US bailout. Under the plan, parents can receive $ 3,000 per child for households with children aged 6 to 17 and $ 3,600 for children 5 and under.

To put this money in people’s pockets sooner, the IRS advances half of the credit in monthly payments until the end of the year. Eligible parents will receive $ 300 per month for each child 5 and under and $ 250 for older children. The rest will come when filing 2021 tax returns.

The first installments saw families in Wisconsin receive an average payment of $ 443, according to a statement from the US Treasury Department.

Alberts said people with bank accounts receive payments faster by direct deposit than by paper check – and without worrying about losing payment in the mail. Even payment cards like Carillon or Greendot, which are often unregulated by the federal government, can be risky options if lost or stolen, she said.

“It’s about affordability, safety and accessibility,” Alberts said.

Wisconsin does not regulate check cashing fees, which typically range from 1% to 12%. This translates to $ 10 to $ 120 on a check for $ 1,000.

“The bigger the check, the more you’re going to pay to get your own money,” Alberts said. “I don’t know a lot of people who really want to pay for their own money. ”

Check-cashing fees may add up for unbanked people, those without a bank account, or those referred to as “under-banked,” who have an account but still rely on payday loans or services. cashing checks for certain needs.

In the greater Milwaukee area roughly 31 percent of people are unbanked or underbanked, Alberts said. People falling into these categories are disproportionately black and Hispanic.

The costs they face go beyond federal payments. Check cashing fees can swallow up all kinds of payments. Even paying rent, utility, or cell phone bills costs more, as individuals have to get a warrant for each.

In contrast, some certified accounts don’t have a monthly maintenance fee, while others can be as low as $ 5. This covers any number of transactions, amortizing after the very first.

“With these accounts, you can’t overdraft the accounts at all,” Alberts said. “If you don’t have the money in it, the transaction does not go through and you are not accused of the attempted transaction that will sometimes occur with other financial institutions.”

Additionally, having a banking relationship creates financial stability and provides access to financial tools and resources to save, to buy a house, car, or even start a 529 savings plan to help pay for college education. .

“Having a bank account can be that basic,” Alberts said.

How to get help

To move the child tax credit payment to direct deposit, you can add or update bank account information on the IRS Child Tax Credit Update Portal: www.irs.gov/credits-deductions/child-tax-credit-update-portal.

For more information on Bank on certified accounts which can be opened online, go to: covidbanking.joinbankon.org.

A list of banks and credit unions with low cost and low cost offers certified accounts affiliated with Bank On Greater Milwaukee can be found at: bankonmilwaukee.org/accounts

FDIC Information #GetBanked awareness campaign: hwww.fdic.gov/getbanked.

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