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All Contents © 2020The Kiplinger Washington Editors
By Rocky Mengle, Tax Editor
| April 25, 2020
There are two ways to receive your $1,200 stimulus check (if you're eligible to receive one). You can have it deposited directly into your bank account, or you can receive a paper check in the mail. Millions of Americans have already received electronic stimulus payments from the IRS via direct deposit. And now the IRS is also starting to mail paper checks to people who don't have a bank account or haven't signed up for direct deposit. (To see the IRS's paper check mailing schedule, see When Will I Get My Stimulus Check?).
If you end up getting a paper stimulus check, you can either cash it or deposit it into your existing bank account. But what if you don't have a bank account—what are your options? Can you just go to any bank? What about cashing the check at a store? Should you try a check-cashing business? If you're not sure what's best for you, here are a few ideas to consider.
There's still time to avoid a paper check altogether. Open a bank account now—before the IRS starts to process your paper check—and then use the IRS's "Get My Payment" portal to send the IRS your bank account information. If you do this in time, the IRS will deposit your stimulus check directly into your new bank account instead of sending you a paper check. You should first check the status of your payment on the portal (irs.gov/coronavirus/get-my-payment) to make sure a paper check isn't already in the mail.
The American Bankers Association has a list of U.S. banks that can open an account for you online. You won't even have to visit a branch. You can open these accounts with a zero balance and fund them later with your stimulus check.
If you're not able to open a bank account before your paper check is processed, it still might be a good time to open a bank account. You can deposit your stimulus check into your new account and then draw from the account as needed later (perhaps using an ATM or debit card). Once you have an account, you'll be able to cash other checks at the bank (up to the limit of your account balance) and take advantage of other services that are only available to customers.
With a $1,200 government check in hand, you shouldn't have to worry about minimum initial deposit requirements. Your stimulus check will most likely be well over the threshold amount. However, the bank could charge fees (e.g., monthly service fees, ordering personal checks, etc.). So, make sure you clearly understand any fees associated with your account, including when the bank will charge them.
If you can't find a bank in your town that you want to work with (many of them only have drive-up service right now because of coronavirus concerns), maybe an online bank is right for you. If you wanted to open a savings account, as opposed to a checking account, you might get a better interest rate from an online bank right now, anyway.
Since government checks are considered "safe," some banks will cash stimulus checks for non-customers—but you might have to pay a fee. Call ahead to see if there is a fee, which typical runs from $5 to over $20. (See MyBankTracker.com for a list of fees at the top 20 banks in the U.S.) Also make sure you bring at least two photo IDs with you (e.g., driver's license, passport, military ID, etc.).
The Federal Deposit Insurance Corporation (FDIC), which helps regulate banks and insures bank deposits, is encouraging financial institutions to work with people impacted by the coronavirus crisis, including by waiving fees and easing restrictions on cashing non-customer checks. So, hopefully, there is a bank (or credit union) near you that will cash your stimulus check without a fee.
Courtesy of Walmart
Some large retailers will cash your stimulus check for you. Expect to pay a fee, though. Walmart, for example, will cash a government check of up to $5,000. Their fee is $4 for a check up to $1,000; $8 for a check above that amount. You can also have the amount of your stimulus check added to a Walmart "MoneyCard," which is a prepaid debit card.
Your neighborhood grocery store might cash your check, too. For example, if you shop at Kroger, Dillons, King Soopers, Smith's, Fry's Food, or another affiliated grocery store with a Money Services counter, you can cash your stimulus check for free (restrictions may apply). Stop & Shop is another grocery store that will cash a stimulus check, but you may have to apply for a payroll and business check cashing card at your local store first. Other grocers across the country cash government checks—so touch base with your local store to see if they offer this service.
Courtesy of PayPal
PayPal has a service that lets you cash checks and have the amount credited to a PayPal "Cash Plus" account. You can do it all on your phone or other mobile device using the PayPal app. Just take a picture of the check and send it for approval. You pay a fee if you want the money credited to your account immediately, but there's no fee if you can wait 10 days. And now for the good news—PayPal is waiving the fees for paper stimulus checks, so you can get the money into your PayPal account right away for free.
Convenience story giant 7-Eleven also has a debit card program that you can use. Anyone with a Trans@ct Card can cash a check and apply the funds to your debit card account using a smart phone. Undisclosed fees may apply, though (see the cardholder agreement for details).
Netspend, Ingo Money, and others provide similar services that let you cash a stimulus check using your phone. Again, make sure you understand the fees before you sign up.
Every city and even many small towns have cash-checking businesses that will handle a stimulus check for you. However, there's a good chance you'll pay higher fees at these stores than if you use one of the other options discussed above. For some people, though, the extra cost is worth it because of the store's hours, location, or additional services—and you don't have to have a pre-existing relationship with them.
Some states limit the fees charged by check-cashing businesses. Pennsylvania, for example, limits the charge for cashing a government check to 1.5% of the check's face value (or $18 for a $1,200 stimulus check). In California, the maximum fee for cashing a government check is $3. In other states, like Michigan or Texas, check-cashing businesses are not regulated. As a result, there is no limit on the fees businesses in these states can charge for their services.