With both Democrats and Republicans calling for a second round of stimulus checks in their coronavirus relief plans, it's likely that another economic impact payment will be agreed upon in the coming weeks.
For those who qualify, these checks are much needed: unemployment remains at an all-time high and the additional $600 unemployment benefits expired at the end of July. Many Americans wonder how they will pay their bills and several financial institutions are extending their financial assistance programs to help consumers who are struggling to make ends meet.
According to a memo from the Senate Finance Committee released on the heels of last week's proposal, the qualifications to receive another stimulus check mirror what was passed back in March under the CARES Act.
Here's who would qualify:
- Individuals earning a gross adjusted income up to $75,000 per year in 2019 (or 2018, depending on their latest tax return filed) would receive the full $1,200. From there, the checks would be reduced by $5 for every $100 in income, phasing out completely at $99,000.
- Couples earning a gross adjusted income up to $150,000 per year in 2019 (or 2018, depending on their latest tax return filed) would receive the full $2,400. From there, the checks would be reduced by $5 for every $100 in income, phasing out completely at $198,000.
- Individuals with dependents would receive an additional $500 for each dependent of any age. Under the CARES Act, dependents had to be under 17 years of age. Democrats proposed raising dependent pay to $1,200 for each and capping it at three dependents per household.
- Individuals with no income and those whose income comes from programs such as SSI benefits would still be eligible for the full rebate amount.
Under the Senate's new bill, anyone who died prior to January 1, 2020, and anyone in prison would not receive a stimulus check.
Leaders in the House, Senate and White House are still debating key points of legislation, and Politico is reporting that a deal won't be reached until next week at the earliest.
How the stimulus money can help
If you already have your basic needs covered, such as housing and food costs, it's worth spending the stimulus check on paying off any outstanding credit card debt.
Sallie Krawcheck, co-founder and CEO of the digital investment platform Ellevest, says that if you feel stable about your job and income right now but have an outstanding credit card balance, put the money toward that debt.
Because credit cards come with notoriously high interest rates, it's not worth carrying a balance if you can afford to chip away at it. And, as your credit card balances decrease, your credit utilization rate also lowers, which helps improve your credit score.
Depending on your credit score, you might also consider looking into transferring your debt to a balance transfer credit card. These credit cards offer an introductory interest-free period ranging from six to 21 months. Many balance transfer cards, like the Citi Simplicity® Card (see rates and fees), require good to excellent credit to qualify, but a few like the Citi Double Cash Card® (see rates and fees) allow applicants with fair credit to qualify.
