Published: April 27, 2020 at 12:18 p.m. ET
By Francis X. Suarez, Bibi Hidalgo and Aaron Klein
Miami Mayor Suarez: Protect relief checks from debt collectors and allow for immediate deposit
In battling the coronavirus crisis and its effects, every second counts. Technology and the speed with which it can be deployed determines financial survival, quality of life, and access to critical care.
So while we applaud the delivery of $1,200 stimulus payments from the CARES Act to Americans adjusting to the COVID-19 crisis, 70 million or more Americans are still waiting for their check to arrive in the mail.
This unnecessary delay has revealed an uncomfortable truth: The less money you have, the more it costs to access it. Without that relief check, many Americans are living on the edge: missing rent payments; skipping utility bills; cutting the grocery list, among other painful choices no one should ever have to make.
Those waiting for stimulus checks to arrive face a difficult decision. You can deposit it into your bank account and wait for it to clear, but this process can take days. If you deposit your check on a Friday afternoon, for instance, your money likely won’t be available until the following Tuesday at best. Or, like many people are forced to do, you can pay a check-cashing service to get your own money faster.
Speeding delivery of the stimulus checks would help those Americans in desperate need following the loss of a job or the closure of a business. Swift action from leaders in Washington is needed now to fix this problem.
Overdraft charges take a toll
Americans pre-COVID incurred $50 billion a year in bank overdrafts fees, payday loans, and check cashing. Bank overdraft fees are now a staggering $35 billion a year profit source for banks; —close to 10 million people spend more than $300 a year on overdrafts (each one is $35). Bank executives know how lucrative this is, one bank CEO in Minnesota even named his yacht Overdraft. How many families recently got hit with a $35 fee or more over the Easter and Passover holiday weekend waiting for their relief payment, which Treasury sent on Good Friday?
Many try to avoid bank overdrafts by going to a check casher: that’s why one out of every 16 Americans uses them. The allure is getting your money immediately, but the price is high. In Florida, check casher businesses can charge up to 3% to cash a Treasury Department check, which would eat up more than $100 of a COVID-19 relief payment for a married couple with two kids.
To provide some context, if one out of every 16 residents in Miami used a check casher to get the money from their stimulus payment, these businesses would pocket $1.4 million from this transaction alone. On a national level, more than $250 million of emergency CARES Act funds would go to check cashers. Moreover, the use of check-cashing outlets will likely increase as word gets out that the Treasury Department is allowing debt collectors to seize stimulus checks before they reach people’s bank accounts.
Read: One $1,200 stimulus check won’t cut it. Give Americans $2,000 a month tax-free to fire up the economy.. more..