Why Are Banks Taking Away Stimulus Checks?

April 16, 2020

Now you see it, now you don’t.

Many Americans have fallen on tough times amidst the coronavirus pandemic and are relying on the $1,200 checks being sent out by the federal government.

However, a handful of customers have reported seeing their money disappear from their bank accounts.

According to The New York Times, banks are snatching up the stimulus checks to pay off debts and applying them to negative balances on accounts.

The New York Post cited multiple examples where customers saw their money vanish. In one instance, a Minneapolis woman and her disabled veteran husband didn’t see the $2,400 they were expecting to use to pay rent and purchase infant formula. Instead, it was credited to pay off their overdrawn account.

Similarly, a man in South Carolina said his check was taken to pay off an account overdrawn by $2,650, which he says is due to a music subscription he forgot to cancel. And another woman in Massachusetts detailed a back-and-forth fight with her credit union, which she notes took part of her check to fund an overdrawn account.

While many banks including are refusing to touch the money, there’s nothing stopping them from taking what’s theirs.

The American Prospect reported that feds have given banks the green light to tap into the money to pay off the outstanding debts of customers.

Still, certain banks like JP Morgan Chase said they would pause collections on negative balances and, in some cases, credit overdrawn accounts.

“We hope this gives them a chance to catch their breath,” JPMorgan spokeswoman Anne Pace told the Post.

Millions of Americans have been laid off or furloughed as a result of the pandemic with many unable to provide for their families. The Wall Street Journal notes that the U.S. now has 22 million Americans who have applied for unemployment.

The checks are part of the $2.2 trillion stimulus bill Congress passed last month.

Eligible individuals making less than $75,000 a year will receive $1,200, those who earn between $75,000 and $99,000 will see a gradually reduced payment, while those who make more than $99,000 will get nothing.

The IRS has launched a new tool called, "Get My Payment," that allows Americans awaiting their stimulus checks to check on the status of their payments.

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