How stimulus check funds could arrive sooner

Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. UponArriving has partnered with CardRatings for our coverage of credit card products. UponArriving and CardRatings may receive a commission from card issuers. 

There is a good chance that lawmakers may surprise the general public and have a finalized agreement by the end of tomorrow. Most likely, it will still take several days for the new stimulus package to pass which means that nothing will get passed until next week (in the best case scenario).

This will mean that stimulus checks could start rolling out in as little as two weeks. We know that the White House is favoring a rapid disbursement of stimulus checks and there have been talks that they will be going out one week after the stimulus package passes.

This seems like it could be feasible given that the government had a test run with the first round of stimulus checks.

During that first round, there were quite a few issues and we saw things like checks going out to deceased individuals and to foreign workers and also some people receiving mismatched names.

But still it does seem like they were able to get the process fixed and working relatively well as millions of Americans receive stimulus checks pretty promptly.

But there is one delay that could easily be removed come the next round of stimulus checks.

The Expedited Funds Availability Act of 1987 states that checks from the Treasury Department must be available for withdrawal “not later than the business day after the business day” when the funds are deposited. 

That usually is a matter of two business days although when it comes to weekends and holidays, that timeframe can be extended out to an additional 3 to 5 days.

So in many cases, there is an additional 3 to 5 day waiting period that is not necessarily essential for processing stimulus checks.

This is because checks from the government do not bounce. In fact, it was exactly this fact that allowed many banks to allow instant withdrawal for stimulus checks even before the checks had been processed.

Brookings Economic Studies Fellow Aaron Klein explained it all in a July op-ed.

“Changing this one line [of the law] to ‘immediately’ would save people millions in bank overdrafts, check cashing fees, late fees, unnecessary payday loans, and countless other hardships and anxieties,” Klein said.

 The Fed has the authority to make this change but there is also a push for Congress to authorize an update to the rule.

For example, The Payment Modernization Act of 2019, introduced by Chris Van Hollen (D-MA), Elizabeth Warren (D-MA), Ayanna Pressley (D-MA), and Jesús “Chuy” García (D-IL), “aims to update the Federal Reserve operations to create a national real-time payment system.”

It’s not clear that there is enough support yet to introduce enhanced payment systems. However, if these systems could be implemented some people could receive their funds from their checks close to one week quicker.

H/T

Related

Stimulus package update, Lawmakers set goal for agreement

Next stimulus package might be on hold, here’s why

Stimulus check update (August recap)

UponArriving has partnered with CardRatings for our coverage of credit card products. UponArriving and CardRatings may receive a commission from card issuers. Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

Leave a Reply

Your email address will not be published. Required fields are marked *