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Average U.S. Credit Card Debt in 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Updated – March 26, 2019

Credit card balances are at all-time highs. Rate increases by the Federal Reserve  will mean consumers pay billions more in interest charges.

We’ve updated our statistics on credit card debt in America to illustrate how much consumers are now taking on.

  • Americans paid banks $113 billion in credit card interest in 2018, up 12% from the $101 billion in interest paid in 2017, and up 49% over the last five years, as Fed rate increases have been passed on to consumers. MagnifyMoney analyzed FDIC data through December 2018 for each bank whose deposits are insured by the FDIC.
  • The four Federal Reserve rate increases in 2018 meant most credit card Annual Percentage Rates (APRs) increased a full percentage point more last year. Even without any interest rate increases in 2019, we estimate the increase in interest paid in the coming will continue to grow, putting Americans on track to pay over $122 billion in interest in 2019, an additional $9 billion more than the $113 billion currently being paid annually. Our analysis of the impact of Fed rate hikes found credit card rates are the most sensitive to Fed rate hikes, rising more than twice as fast as mortgage rates.
  • Average APRs on credit card accounts assessed interest are now 16.86%, up nearly 4 percentage points in five years, according to the Federal Reserve.

  • Total revolving credit balances are $1.03 trillion as of January 2019. The figure, reported monthly by the Federal Reserve, is the total amount of revolving credit balances reported by financial institutions, the overwhelming majority of which are credit and retail card balances, according to the Consumer Financial Protection Bureau (CFPB). As of March 2018, non-card-related revolving balances such as overdraft lines of credit were approximately $74 billion, according to our analysis of the FDIC data used by the Federal Reserve to calculate total revolving balances.

  • Americans carry $682 billion in credit card debt that is not paid in full each month. This estimate includes people paying interest, as well as those carrying a balance on a card with a 0% intro rate. We based the estimate on a CFPB study of credit card account data that found 29% of total credit card balances are paid off each month, implying 71% of credit card balances revolve each month. We applied the percentage to the Federal Reserve’s revolving credit balance data less $74 billion in non-credit card revolving debt to reach $682 billion in credit card balances carried over month to month.
  • 43.8% of credit card accounts aren’t paid in full each month, according to the American Bankers Association. Those who don’t pay in full tend to have higher balances, which is why the percentage of balances not paid in full (71%) is higher than the percentage of accounts not paid in full (43.8%).
  • The average credit card balance is $6,348 for individuals with a credit card, according to Experian. This excludes store credit cards, which have an average balance of $1,841. Both figures include the statement balances of individuals who pay their balance in full each month.

Credit card use

  • Number of Americans who actively use credit cards: 176 million as of 2018, according to Transunion.
  • Average number of credit cards per consumer: 3.1, according to Experian. That doesn’t include an average of 2.5 retail credit cards.
  • Number of Americans who carry credit card debt month to month: 70 million.

Credit card debt

The following estimates only include the credit card balances of those who carry credit card debt from month to month — they exclude balances of those who pay in full each month.

  • Total credit card debt in the U.S. (not paid in full each month): $686 billion
  • Average APR: 16.86% (also excludes those with a 0% promotional rate for a balance transfer or purchases)
    • This estimate comes from the Federal Reserve’s monthly reporting of APRs on accounts assessed interest by banks.

Credit card balances

The following figures include the credit card statement balances of all credit card users, including those who pay their bill in full each month.

  • Total credit card balances: $1.03 trillion as of January 2019, an increase of 3.2% from January 2018. This includes credit and retail cards, and a small amount of overdraft line of credit balances.
  • Average credit card balance: $6,358, according to Experian (excludes retail credit cards, which have lower balances. The average consumer has $1,841 in balances on retail cards and we estimate combining all consumers with retail or credit card debt the average is approximately $5,000 per individual). All averages include those who pay their bill in full each month.

Who pays off their credit card bills?

According to the American Bankers Association, in 2018, accounts that are paid in full versus carrying debt month to month comprise the following mix of open credit card accounts:

  • Revolvers (carry debt month to month): 43.8% of credit card accounts
  • Transactors (use card, but pay in full): 30.4% of credit card accounts
  • Dormant (have a card, but don’t use it actively): 25.8% of credit card accounts

Delinquency rates

Credit card debt becomes delinquent when a bank reports a missed payment to the major credit reporting bureaus. Banks typically don’t report a missed payment until a person is at least 30 days late in paying. When a consumer doesn’t pay for at least 90 days, the credit card balance becomes seriously delinquent. Banks are very likely to take a total loss on seriously delinquent balances.

Delinquency rates peaked in 2009 at nearly 7%, but in 2018 they have remained below 2.5%.

Debt burden by income

Those with the highest credit card debts aren’t necessarily the most financially insecure. According to the 2016 Survey of Consumer Finances, the top 10% of income earners who carried credit card debt had nearly twice as much debt as the average.

However, people with lower incomes have more burdensome credit card debt loads. Consumers in the lowest earning quintile had an average credit card debt of $2,100. However, their debt-to-income ratio was 13.9%. On the high end, earners in the top decile had an average of $12,500 in credit card debt. But debt-to-income ratio was just 4.8%.

Income Percentile

Median Income

Average CC Debt

CC Debt: Income Ratio

0%-20%

$15,100

$2,100

13.9%

20%-40%

$31,400

$3,800

12.1%

40%-60%

$52,700

$4,400

8.3%

60%-80%

$86,100

$6,800

7.9%

80%-90%

$136,000

$8,700

6.4%

90%-100%

$260,200

$12,500

4.8%

 

Although high-income earners have more manageable credit card debt loads on average, they aren’t taking steps to pay off the debt faster than lower income debt carriers. In fact, high-income earners are as likely to pay the minimum as those with below average incomes. If an economic recession leads to job losses at all wage levels, we could see high levels of credit card debt in default.

Generational differences in credit card use

In 2017, Generation X surpassed the baby boomer generation to have the highest credit card balances. Experian estimates that on average, Generation X has a balance of $7,750 per person, 21.94% more than the national average ($6,354). Boomers carry nearly as much as Generation X with an average balance of $7,550.

At the other end of the spectrum, millennials, who are often characterized as frivolous spenders and are too quick to take on debt, have nearly the lowest credit card balances. Their median balance clocks in at $4,315. The youngest generation, Gen Z, has the smallest average balance of $2,047 per person.

How does your state compare?

Using data from the Federal Reserve Bank of New York Consumer Credit Panel and Equifax, you can compare median credit card balances and credit card delinquency.

State

Credit Card Debt Per Debtor

Credit Card Debt Per House

Alabama

$3,710.56

$7,198.48

Alaska

$5,879.85

$11,406.91

Arizona

$4,299.70

$8,341.42

Arkansas

$3,289.01

$6,380.69

California

$4,569.51

$8,864.85

Colorado

$4,898.56

$9,503.20

Connecticut

$5,171.89

$10,033.47

Delaware

$4,338.88

$8,417.42

Florida

$4,318.35

$8,377.59

Georgia

$4,727.46

$9,171.27

Hawaii

$5,330.46

$10,341.09

Idaho

$3,791.84

$7,356.18

Illinois

$4,412.71

$8,560.65

Indiana

$3,624.05

$7,030.65

Iowa

$3,169.16

$6,148.17

Kansas

$3,854.05

$7,476.85

Kentucky

$3,457.67

$6,707.88

Louisiana

$3,767.91

$7,309.75

Maine

$3,905.56

$7,576.78

Maryland

$5,287.61

$10,257.96

Massachusetts

$4,720.53

$9,157.83

Michigan

$3,458.51

$6,709.51

Minnesota

$4,257.26

$8,259.08

Mississippi

$3,204.95

$6,217.60

Missouri

$3,763.46

$7,301.11

Montana

$3,732.83

$7,241.69

Nebraska

$3,594.46

$6,973.25

Nevada

$4,263.19

$8,270.59

New Hampshire

$4,943.44

$9,590.27

New Jersey

$5,361.06

$10,400.47

New Mexico

$4,185.93

$8,120.71

New York

$4,969.84

$9,641.50

North Carolina

$4,124.04

$8,000.63

North Dakota

$3,756.19

$7,287.00

Ohio

$3,738.95

$7,253.56

Oklahoma

$4,038.90

$7,835.47

Oregon

$3,881.17

$7,529.48

Pennsylvania

$4,209.21

$8,165.86

Rhode Island

$4,376.34

$8,490.10

South Carolina

$4,187.65

$8,124.04

South Dakota

$3,608.28

$7,000.07

Tennessee

$3,903.24

$7,572.28

Texas

$4,937.00

$9,577.78

Utah

$3,775.21

$7,323.92

Vermont

$4,199.77

$8,147.56

Virginia

$5,404.32

$10,484.38

Washington

$4,568.09

$8,862.09

West Virginia

$3,381.36

$6,559.84

Wisconsin

$3,410.29

$6,615.96

Wyoming

$3,944.72

$7,652.76

 

State

Silent

Boomers

Gen X

Millennials

Gen Z

Alaska

$5,456

$9,495

$8,995

$4,464


$1,518


Alabama

$3,511

$6,461

$6,485


$3,324


$1,455




Arkansas

$3,194

$5,995

$6,197


$3,240


$1,803


Arizona

$4,149

$6,967

$6,778


$3,575


$1,555


California

$4,232

$7,050

$6,578


$3,654


$1,596


Colorado

$4,004

$7,499

$7,439


$3,833



$1,514


Connecticut

$4,091

$8,179

$8,046


$3,716



$2,567


Dist. of Columbia

$5,486

$7,976

$7,393


$4,596



$2,814


Delaware

$4,147

$7,128

$7,144


$3,285



$1,608


Florida

$4,311

$7,047

$6,615


$3,639



$1,837


Georgia

$4,356

$7,517

$6,972


$3,540


$1,835


Hawaii

$4,386

$7,073

$7,355


$4,203


$1,657


Iowa

$2,367

$5,297

$6,163


$2,857


$935


Idaho

$3,477

$6,147

$6,332


$3,193


$928


Illinois

$3,641

$7,054

$7,040


$3,537


$1,556


Indiana

$3,137

$5,998

$6,174


$3,003


$1,402


Kansas

$3,187

$6,514

$6,930


$3,292


$1,421


Kentucky

$3,044

$5,727

$6,080


$3,082


$1,372


Louisiana

$3,679

$6,598

$6,561


$3,425


$1,971


Massachusetts

$3,481

$7,017

$7,022


$3,479

$1,882


Maryland

$4,341

$7,994

$7,458


$3,671


$1,749


Maine

$3,107

$6,054

$6,531


$3,375


$1,286


Michigan

$3,436

$6,049

$6,113


$2,971


$1,523


Minnesota

$3,025

$6,299

$6,898


$3,244


$1,338


Missouri

$3,265

$6,333

$6,757


$3,279


$1,346


Mississippi

$3,218

$5,634

$5,718


$3,043


$2,011


Montana

$3,285

$5,977

$6,868


$3,385


$1,506


North Carolina

$3,481

$6,566

$6,710


$3,397


$1,486


North Dakota

$2,141

$5,362

$6,646


$3,326


$1,467


Nebraska

$2,717

$5,909

$6,498


$3,136


$1,388


New Hampshire

$3,582

$7,140

$7,443


$3,519


$1,666


New Jersey

$4,126

$8,011

$7,882


$3,928


$2,241


New Mexico

$4,373

$6,906

$6,534


$3,532


$1,207


Nevada

$4,733

$6,993

$6,357


$3,700


$1,185


New York

$3,906

$7,127

$7,234


$3,986


$2,495


Ohio

$3,313

$6,383

$6,530


$3,135


$1,465


Oklahoma

$3,484

$6,789

$6,900


$3,493


$1,641


Oregon

$3,618

$6,502

$6,481


$3,245


$856


Pennsylvania

$3,282

$6,550

$7,059

$3,457


$1,545


Rhode Island

$3,524

$7,162

$7,313


$3,371


$1,786


South Carolina

$4,019

$6,537

$6,559


$3,281

$1,375


South Dakota

$2,584

$5,710

$6,900

$3,250


$1,531


Tennessee

$3,388

$6,309

$6,505


$3,308


$1,737


Texas

$4,350

$7,591

$7,119


$3,779


$1,945


Utah

$3,364

$6,411

$6,713


$3,070


$932


Virginia

$4,132

$7,956

$7,968


$3,985

$1,692


Vermont

$3,681

$6,197

$6,547


$3,297


$2,511


Washington

$3,947

$7,365

$7,190


$3,500


$1,355


Wisconsin

$2,740

$5,673

$6,289


$2,914


$992


West Virginia

$2,914

$5,573

$6,158


$3,238


$1,166


Wyoming

$3,523

$6,356

$6,889

$3,663

$1,442

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Survey Reveals How Consumers Will Spend Stimulus Money: Groceries, Bills and Savings Top the List

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

In the face of the coronavirus pandemic, many Americans are dealing with furlough, unemployment, reduced pay or climbing health care costs. To offer support, Congress has passed a historic $2 trillion relief package that includes direct payments for eligible Americans.

With millions of taxpayers slated to receive relief checks in the coming weeks, many are making plans for how to spend the unexpected windfall. A new survey from MagnifyMoney of more than 1,000 Americans reveals that for most, the relief check is a necessity. Nearly half of survey respondents said they plan to use the money on essentials like groceries and bills, underscoring the current fragile state of Americans’ finances.

Key findings

  • We asked consumers how they’ll spend their stimulus check, should they receive one. The top two responses were paying for groceries and paying for bills. Additionally, 44% plan to save at least some of the money.
  • The checks are a necessary reprieve for most of the survey respondents, as nearly 7 in 10 (69%) said they need the stimulus money. Another 26% said that while they don’t necessarily need the money, it will help. Just 6% said they don’t need it.
  • While many said the check will help, they aren’t necessarily certain it will be enough. Most of our respondents (40%) said the stimulus check will relieve “a few” of the difficulties they’ve been facing, while 10% said they’ll still be experiencing a significant level of financial difficulty. The good news is that 18% said the stimulus money will remove all of the difficulties they’re facing due to the pandemic, and another 17% said it will alleviate most financial difficulties.
  • Consumers are split in terms of satisfaction with the monetary value of the stimulus checks. About 41% think the check amount is “just right,” though 39% think it’s too small. Only 4% thought the amount was too large.
  • About half (49%) of respondents agree with the income limit proposed by the government. However, 21% think the threshold should be lowered so that higher income individuals would receive even less. On the other hand, 11% said there should not be an income limit.
  • Some will have to wait longer than others to receive their funds. About 8% of our survey respondents don’t have a bank account, which would slow down the time it takes for them to have access to those funds because they’ll be waiting for a check to arrive in the mail instead of the funds being direct deposited in their bank account. Meanwhile, less than 60% have direct deposit set up with the IRS.
  • Nearly all consumers we surveyed (85%) think the government’s plan is a good idea. The intention of the stimulus checks is to help counter the negative financial and economic impacts of coronavirus.

How Americans are spending their stimulus checks

Our survey found that the stimulus checks, being distributed as part of the coronavirus relief package, are acting as a safety net for many Americans. When we asked respondents what they plan to spend their stimulus check on (they could select all answers that applied), the top two answers were to pay for groceries (45%) and to pay for bills (43%).

Meanwhile, we found that 29% of respondents plan to use their check to make their rent or mortgage payment, 26% are going to put some of it in savings and 18% plan to put all of the money in savings.

Generational and income-level differences in stimulus check spending

When looking at how different generations intend to spend their relief checks, we found that millennials were more likely than any other generation to say that they plan to use their relief check to pay for bills (49%) and to pay their rent or mortgage (37%). Understandably, the youngest generation — Gen Z — was the age group most likely to plan to use their relief check to pay off student loans (11%). They were also the generation most likely to put either all of their check in savings (21%) or most of it (39%).

Our survey also revealed that households with lower incomes were, for the most part, more likely to use their relief checks to pay for necessities, such as groceries, bills or housing costs. Meanwhile, we found that 7% of households that make $100,000 or more annually plan to donate their entire relief check to charity or someone in need.

Americans that need stimulus checks the most

Overall, our survey revealed that the relief checks are much needed, with 69% of survey respondents saying that they personally need the financial assistance. That’s in comparison to 26% of respondents who said that they don’t really need the check but that it will help and just 6% who say they don’t need it at all.

Across all generations, the overwhelming majority of respondents said they indeed needed the relief payment. However, Gen Zers were far more likely to say that they didn’t need the relief check (10%) compared to millennials, Gen X and baby boomers. One possible explanation for this could be that Gen Zers could have parents or other older adults supporting them financially. Not surprisingly, our survey also found that households with less than $25,000 in annual income were far more likely to say they needed the relief check (80%), compared to 50% of households that make $100,000 or more.

Of survey respondents who said they did not need the relief check, nearly half (45%) said they still do not feel guilty about receiving one. However, 10% of those who said they do not need the check admitted to feeling guilt over receiving the check and plan to donate it. Another 10% that feel guilty, though they still intend to use their check. Meanwhile, 35% of respondents who said they don’t need a check don’t expect to receive one — which are likely people who make too much money to qualify.

Do Americans think the stimulus checks are enough?

While Congress moved swiftly to provide relief to families facing financial turbulence, our survey found that many Americans (39%) do not think the checks are enough. The checks are for up to $1,200 per eligible adult and up to $2,400 for couples filing joint returns, with an additional $500 per child under the age of 17.

Though many are dissatisfied with the amount of the checks, 41% of Americans think that the amount of the stimulus checks is just right. Another 4% even said that the amount is too much.

As for the income thresholds that apply to the relief checks — which start at $75,000 for individuals and $150,000 for jointly filing married couples — nearly half (49%) of survey respondents said that they agree with the U.S. government’s decision to implement income thresholds as well as with the income limits they chose. Another 21% agreed that there should be income limits but thought those limits should be lower, while 9% thought the limits should be higher. In contrast, 11% said that there should not be an income limit at all.

As a glimmer of good news, our survey found that the majority of respondents (74%) said that the relief checks will help relieve either some or all of the difficulties they’ve been facing as a result of the coronavirus pandemic. However, 10% of respondents said they will still be facing a significant level of financial difficulty despite the relief check.

When will the stimulus checks go out?

On March 30, the IRS announced that payments will be disbursed within the next three weeks. Those who chose to receive their tax refund via direct deposit, as opposed to mailed checks, can expect to receive their relief check faster.

If you did not share your bank account information with the IRS when filing your taxes, the Department of the Treasury plans to open an online portal that will allow you to share your direct deposit information with the IRS, enabling you to get your relief check faster.

What you should do with your stimulus check

While our survey’s findings revealed that many taxpayers already plan to spend their stimulus checks on necessities like bills and groceries, some might feel uncertain about how to prioritize competing financial needs. Matt Schulz, the chief credit analyst for LendingTree, acknowledges there is no one-size-fits-all answer when it comes to how people should use their stimulus checks, but says it’s important to carefully plan what you do with it.

“If you can put some of the check away to start an emergency fund or build up your current one, that’s probably ideal,” Schulz said. “That’s not reality for millions of Americans, though. For many, this will be about keeping the lights on or putting food on the table. That’s why these checks are so, so important.”

If you’re focused on using your check to demolish debt, Schulz emphasizes the importance of having an emergency fund in place as well. “It’s obviously great to pay down debt, but far too often, people pay off debt and have no savings at all,” Schulz said. “That means that if an unexpected expense comes up, that cost goes right back on the credit card and the person is right back in debt. Having even a little bit of cash in savings can help avoid that situation.”

If you’re on good financial footing, Schulz points out a number of good uses for that money, including:

  • Growing your rainy-day fund
  • Paying off credit card debt
  • Bulking up your retirement savings
  • Supporting your community by spending on small businesses or nonprofits

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,038 Americans, with the sample base proportioned to represent the overall population. We defined generations as the following ages in 2020:

  • Gen Z: 18 to 23
  • Millennials: 24 to 39
  • Gen X: 40 to 54
  • Baby boomers: 55 to 74
  • Silent generation: 75 and older

The survey was fielded March 26-27, 2020.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Places Where Taxpayers May Wait Longer for Their Stimulus Checks

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The CARES Act stimulus checks may offer some relief to taxpayers amid the coronavirus outbreak, but distribution may pose a problem for the millions who don’t use direct deposit to receive their tax refunds. In 2019, 19.8 million taxpayers waited longer for their tax refunds to arrive via paper check. Today, these same taxpayers will have to wait longer again — potentially up to an additional three months — for their stimulus checks.

MagnifyMoney looked at the 100 largest metro areas in the U.S. to determine where taxpayers used direct deposit the most (and least) to receive their 2018 tax refund. Cities with the highest percentages of check-receiving taxpayers are where people will likely wait longer for financial relief to arrive.

Key findings

  • Visalia, Calif., has the highest percentage of taxpayers that will have to wait a little longer for their relief rebates. About a quarter of taxpayers there (25.9%) didn’t use direct deposit to receive their tax refunds in 2018.
  • Fresno, Calif., isn’t far behind — 23.4% of taxpayers there will likely have to wait longer for a check.
  • While Visalia has the highest percentage of check-receiving taxpayers, the New York City metro area, which ranks 11th, has the highest total number of taxpayers who received a check refund in 2018. Approximately 1.78 million taxpayers in the New York City area may have to wait for a paper relief check, compared with the 46,330 taxpayers in Visalia.
  • Oklahoma City and Tulsa, Okla., were the only two cities out of all the metro areas we looked at where the percentage of check-receiving taxpayers was under double digits. Only 9.8% of taxpayers in Oklahoma City and 9.6% of taxpayers in Tulsa didn’t use direct deposit to receive their tax refunds in 2018.
  • When it comes to the actual number of taxpayers waiting the longest for their stimulus checks, our 93rd-ranked metro area of Davenport, Iowa, has the smallest number of check-receiving taxpayers. In Davenport, 21,690 taxpayers will wait longer, or 12.2% of the metro area’s tax-paying population.

Where taxpayers may have to wait longer for their stimulus checks

On the map below, you’ll find the 100 largest American metro areas ranked in order of highest to lowest percentage of taxpayers who opted to receive their 2018 tax refund by check. The places ranking highest on the list are where taxpayers are most likely to experience delays receiving stimulus payments, given the lag in getting a paper check in the mail compared with money that’s direct deposited into your account.

Taxpayers in California are more likely to be left waiting for their stimulus checks, with half of the top 10 metro areas located in the Golden State. This includes Visalia, Fresno, San Jose/San Francisco, Modesto and Sacramento.

The cities in the bottom 25 — where the lowest percentages of taxpayers within the 100 largest metro areas received refunds by check — are scattered among states in the South and Midwest. Tennessee taxpayers, in particular, seem well-positioned to receive their relief payments quickly — four metro areas in the bottom 15 are in Tennessee, including Chattanooga, Nashville, Johnson City and Knoxville.

What to do if you didn’t use direct deposit

If you’re one of the millions of U.S. taxpayers who don’t use direct deposit for your tax refunds, there are some actions that you can take and options available to ensure you receive your economic impact payment sooner rather than later.

1. File your 2019 tax return as soon as possible

The IRS will distribute these economic impact payments according to the information on taxpayers’ 2019 or 2018 tax returns, whichever is most recent. They will pull your income information as well as your payment method, whether that is direct deposit or paper check. You will need a valid Social Security number to be eligible for the payment.

If your information has changed since your 2018 tax return, it’s best to file your 2019 taxes before the IRS starts automatically sending out payments within the next three weeks. Expediting your filing is even more beneficial when you’re expecting a tax refund, which can provide some extra cash relief. However, the federal tax return deadline has been extended to July 15, 2020.

Individuals who typically don’t have to file a tax return do not need to file a simple tax return to receive the rebate. Instead, the IRS will pull information from Form SSA-1099 or Form RRB-1099 to determine benefits for senior citizens, Social Security recipients and railroad retirees. If you do not typically file a tax return but do not use those forms, you may want to file a simple tax return anyways.

2. Provide your banking information to the IRS online

The U.S. Department of the Treasury is expected to release an online portal “in the coming weeks” for individuals to provide their banking information to the IRS. This will allow you to easily update the IRS on any changes to your banking information.

You can check the IRS’s coronavirus information page for the latest updates.

3. Open an online bank account

Unfortunately, the reality in the U.S. is that about 8.4 million households don’t even have a checking or savings account into which they can direct deposit their tax refund according to the 2017 FDIC National Survey of Unbanked and Underbanked Households. These tend to be lower- or volatile-income households, meaning those already vulnerable and at-risk households may have to wait longer for the government’s stimulus payments to arrive.

If you or someone you know does not have a bank account, consider opening an online bank account so you can more quickly benefit from the stimulus payments. Online bank accounts are less likely to charge monthly service fees, which is often a reason why households are unbanked in the first place. Online savings accounts are also more likely to pay more in interest, which means your money grows while staying safe inside the account. Plus, opening an online bank account doesn’t involve visiting a bank branch, so you can maintain social distancing.

If you’re having trouble opening a traditional bank account due to a rocky financial past, second chance bank accounts are made to help you get back into the banking world. Issuers of these accounts have less strict background requirements, which opens up the opportunity to continue banking even if you have a history of account closures. These accounts are more likely to come with fees, however, which helps issuers cover potential losses.

Methodology

In March 2020, MagnifyMoney examined local-level 2018 tax filing season data from the IRS to identify where taxpayers in each of the 100 largest metros were more and less likely to receive their tax refunds by direct deposit.

For more information on the rest of the stimulus package, refer to our hub page.

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