Bank On Certified Account Holders Keep More of Their Child Tax Credit Funds

Fees from check-cashing services siphoned off $66 million from the first round of stimulus money Americans received last year to help weather the financial upheaval caused by the global pandemic. Most Americans got $1,200 when Congress passed the CARES or Coronavirus Aid, Relief, and Economic Security Act. 

But a report by the Financial Health Network estimated nearly 10% of recipients who received paper checks — instead of a direct deposit — turned to a retailer such as Walmart or check-cashing business to get the money. The February 2021 report was published by the Brookings Institution, a Washington DC-based research group focusing on economics and public policy.

A Milwaukee-based program wants to prevent a repeat of that with the expanded child tax credit payments the federal government began sending out last month, which can tally up to $300 a month per child.

Bank On Greater Milwaukee works to connect residents with financial institutions that offer no-to-low-cost bank accounts. The goal is to ensure low-to-middle-income families have a safe and affordable way to get the payments without paying check-cashing fees, which can run between $10 and $120. Find a list of Bank On Certified Accounts available in Milwaukee here.

“Everybody needs all their money, but when you have limited (income) you need that even more,” said Constance Alberts, program manager of Bank On Greater Milwaukee, an arm of Urban Economic Development Association of Wisconsin.

The expanded child tax credit, which experts say will cut child poverty in half, is part of President Joe Biden’s $1.9 trillion American Rescue Plan. Under the plan, parents can receive $3,000 per child for households with children ages 6 to 17, and $3,600 for kids 5 and under.

To get that money in people’s pockets sooner, the IRS is advancing half of the credit in monthly payments until the end of the year. Eligible parents will receive $300 a month for each child 5 and under and $250 for older children. The remainder will come when 2021 tax returns are filed. 

The first installments saw Wisconsin families receive an average payment of $443, according to a US Treasury Department press release.

Alberts said people with bank accounts get the payments more quickly through direct deposit than paper checks — and without worrying if the payment got lost in the mail. Even pay cards like Chime or Greendot, which are often not federally regulated, can be risky options if they are lost or stolen, she said. 

“It’s about affordability, safety, and accessibility,” Alberts said. 

Wisconsin does not regulate check-cashing fees, which generally run between 1% and 12%. That translates into $10 to $120 on a $1,000 check. “The larger the check is the more you are going to pay to get your own money,” Alberts said. “I don’t know too many people who really want to pay to get their own money.” 

Check cashing fees can add up for unbanked individuals, those without a bank account, or those termed “underbanked,” who have an account but still rely on payday loans or check-cashing services for some needs.  

In the greater Milwaukee area approximately, 31 percent of people are unbanked or underbanked, Alberts said. People falling in those categories are disproportionally Black and Hispanic.

The costs they face go beyond the federal payments. The check-cashing costs may eat up all sorts of payments. Even paying bills for rent, utilities or cell phones cost more since individuals must get a money order for each one.

In contrast, some certified accounts have no monthly maintenance fees, while others may be as low as $5. That covers any number of transactions, paying for itself after the very first one.

“With these accounts, you cannot overdraw the accounts at all,” Alberts said. “If you don’t have the money in it, the transaction does not go through nor are you charged with the attempt of the transaction which sometimes will happen with other financial institutions.” 

What’s more, having a banking relationship creates financial stability and provides access to financial tools and resources to save, in order to buy a house, car or even start a 529-saving plan to help pay for college. 

“Having a bank account can be that foundation,” Alberts said. 

How to get help

To shift the Child Tax Credit payment to direct deposit, you can add or update bank account information on the IRS’s Child Tax Credit Update Portal:

For information on Bank On certified accounts that can be opened online, go to:

A list of banks and credit unions offering low-cost, low-fee certified accounts affiliated with Bank On Greater Milwaukee can be found at:

Information on FDIC’s #GetBanked awareness campaign: