Is it possible to use the money from the stimulus check to pay the rent or the mortgage?
The American Rescue Plan provided $1,400 direct payments to help stimulate the economy, but many are using the support to pay for essential bills.
In little over the month the IRS have distributed a total of 159 million stimulus check payments to eligible Americans, costing over $372 billion of federal cash.
The $1,400 stimulus checks were the most generous offered during the pandemic, and the eligibility requirements were changed to prevent those deemed ‘high-earners’ from receiving the support. But how will this affect the spending habits of stimulus check recipients, and are the payments likely to go on rent or mortgage payments?
Stimulus checks will go on essentials for many Americans
The name ‘stimulus checks’ suggests that the main intention for the payments is to help stimulate the pandemic-struck economy, but in reality many will be looking to use the money to pay for essential costs. As such, many will be spending their $1,400 to cover rent and mortgage payments.
A new report published by the Bankrate.com earlier this month found that 67% of respondents were planning to “put their stimulus checks towards their near-term financial situation”. They report that while some are planning to splash the cash on non-essential purchases (13%), many more will looking to pay off outstanding debts (32%).
But the biggest category of spending across all income brackets is on monthly bills, with 45% of stimulus check recipients planning to spend the money on rent, mortgage, mobile phone or utilities payments. Greg McBride, chief financial analyst at Bankrate, ascribed this caution to the precarious state of the US jobs market.
“More than half of the jobs lost last year have been recovered,” McBride said. “But there are still nearly 9 million jobs that disappeared that haven't yet come back. There are 18 million Americans still drawing some form of unemployment compensation.”
American Rescue Plan extends Emergency Rental Assistance Program
The third stimulus checks were the most eye-catching form of federal relief offered to individual Americans in the recent stimulus bill, but was far from the only one. The package added an extra $25 billion to the Emergency Rental Assistance Program, first introduced by former President Trump, taking the total to $45 billion.
The program can be used to provide support for anyone struggling to cover back rent, current rent and even utility bills. The support is available for those whose income has been so severely hit by the pandemic that they are threatened with homelessness.
For more information on the eligibility requirements to make the most of the scheme, as well as how to apply, check out the Department of Treasury’s Emergency Rental Assistance Program support page.