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It cost Americans more than $66 million to cash their first stimulus checks. Why that could happen again with the $1,400 payments

  • Almost one year ago, Congress authorized the first $1,200 stimulus checks.
  • An estimated 22% of people received that money via mailed paper checks.
  • Some turned to check cashers as an alternative to banks, and paid a hefty price.
  • Recipients of the new $1,400 checks could turn to those services again.

Audrey Saracco / EyeEm

Almost one year ago, Congress authorized the first $1,200 stimulus checks to help Americans cope with the unprecedented coronavirus pandemic.

Most of those payments – 74% – were sent by direct deposit to bank accounts. However, some 22% of Americans received the payments by paper check.

People spent an estimated $66.6 million in fees to cash those checks through retailers or check cashers, according to a recent report by the non-profit organization Financial Health Network and published by Brookings Institution.

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With the next $1,400 checks poised to go out, more Americans may receive them directly via their bank now that the IRS has more accounts on record.

Still, many individuals and families will likely turn to check cashers to access the money sent by paper checks and, as a result, may incur fees they otherwise would not have paid, according to Aaron Klein, senior fellow in economic studies at Brookings.

In addition, the $1,400 will be subject to garnishment for certain debts. Consequently, people could turn to check cashers in an attempt to prevent the money getting siphoned from their bank accounts.

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