/ Terry’s Columns / Don’t Cash that Check!

Don’t Cash that Check!

By Terry Savage on April 16, 2021

The Federal government is in the process of sending out nearly $300 billion in stimulus payments of $1400 each to qualifying recipients. And soon they will start sending $250 per month — per child — to low income families for the new $3,000 annual child care credit. Also, many people who do not pay taxes will be sent an earned income tax credit of nearly $6,000 if the recipient has two children.

Much of the stimulus money will be direct deposited in bank accounts that were listed on tax returns, or into accounts where people already receive Social Security checks. And some stimulus money will come on debit cards sent directly to recipients. But millions of paper checks will also be sent out.

And that’s the problem. Nearly 6% of American households are considered unbanked. They literally have no place to cash the check – except the local currency exchange. That means they pay 3% or more — $42 — to cash that $1400 check. Of if a family of four gets $5600 in stimulus payments, the currency exchange pockets $170. And in many cases the fees are even higher!

Cashing your stimulus payment is a terrible idea in the first place. Yes, many families will use the money quickly to catch up on rent, pay utility bills, and buy food. But no one should be walking around with that much cash. Even worse, this might be the first chance an individual or family has to start building a safety fund for emergencies – money in the bank!

These comments are likely fairly obvious for regular readers of this column. But for millions of Americans, putting money in the bank is an idea that won’t even be considered because they never before had enough money to make a start.

So now, as checks start arriving, is the moment to start a national campaign: Don’t cash that check; Deposit it!

April is financial literacy month. You can help spread this message about basic banking realities. These new, unexpectedly large government payments could be the perfect opportunity to get started. Here’s what to tell them:

• Banking is NOT expensive! Many of the largest banks in your city offer free checking with no minimums, no monthly fees, no ATM fees, and a useful debit card that can be used to get cash at ATMs around the city. For example, in the Chicago area, Wintrust offers completely free checking with no minimum balance, and a free debit card and no fees for using other banks’ ATMs. Chase offers all of the above for a flat fee of $4.95 a month — far less than fees charged at currency exchanges for one cashed check or bill payment.

• Banking does not require visits to a building that is not in your neighborhood! You only have to visit the bank once — to open an account by depositing the check. Then, you can deposit future checks by taking a picture of it on your smartphone, or by mailing the deposit to the bank. (Be sure to get the bank deposit by mail address.)

• You have access to your money at any time – with no fees – through an ATM near you. (Some banks waive fees if you use an ATM that does not belong to their bank.) But those fees for withdrawing cash are a lot less than currency exchange fees.

• You can arrange to have future government benefits deposited directly into your checking account—tax refunds, monthly child credit benefits. And if the court collects child support benefits for you, those can be deposited into the account as well.

• You no longer have to pay bills like utilities at the currency exchange and pay a fee. You can have those utility bills automatically deducted from your new checking account. Or, your debit card works like a credit card to pay your bill by mail or online.

• You can’t be “overdrawn” because if there’s no money in your account, you can’t take it out!

• You’re safer not carrying a lot of cash.

People complain about the banks “making too much money” – but the real problem for unbanked people is payday loans and currency exchanges that prey on their ignorance. If you’re nodding your head in agreement, please join me in spreading the word NOW – as billions of dollars moves into the hands of people who have never had this opportunity to open bank accounts.

Don’t cash that check; deposit it in a bank account.
It’s the perfect time. And that’s The Savage Truth.

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