Millions will get their relief payment via debit card. That’s good … and bad
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The Treasury Department has already started sending out the new round of pandemic relief payments. The IRS says it started making direct deposits into some people’s bank accounts Tuesday.
People who don’t have a bank account on file with the agency can look forward to getting either a paper check or a prepaid debit card in the mail. The Treasury said it sent out around 4 million prepaid cards during the first round of relief. The cards have some advantages over paper checks — but some drawbacks, too.
People who receive the prepaid debit cards are the most likely to not have bank accounts. Tyrone Ross, CEO of the investing platform Onramp Invest, said they’re the people who are going to need to spend the money as quickly as possible.
“It’s not ‘OK well, can I invest this? Or, can I put it into’ — no. It’s ‘I have needs that have to be met,'” he said. “It’s consumption, and that’s what they want.”
Debit cards can also be cheaper than checks for people who don’t have bank accounts. Cashing a check costs them money. But with a card, said Chantel Boyens with the Urban Institute, “there is a network of ATMs where if you have the card, you can access your funds without any fees.”
But people can only make one withdrawal for free from an out-of-network ATM. After that, it costs $2. Boyens said lower-income people are more likely to pay those fees.
“They may be located in areas where they don’t have as good of access to in-network ATMs,” she said.
The cards also come with terms of service. And Ira Rheingold, executive director of the National Association of Consumer Advocates, said some of them put card users at a disadvantage.
“You, consumer, if you have a complaint, you cannot go to court. You cannot be part of a collective action, a class action,” Rheingold said.
Members of Congress sent a letter to the Treasury this week, asking it to remove those clauses and reduce any fees.
COVID-19 Economy FAQs
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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