The IRS has officially started rolling out coronavirus stimulus checks to millions of Americans.
Between 50 and 70 million people are due to receive the stimulus checks, which are part of the government's $2.2 trillion economic recovery package and intended to stimulate the stalled economy during the coronavirus pandemic and subsequent shut downs of most aspects of civil life. Residents who've filed taxes in the past two years and submitted their direct deposit information began receiving the deposits on Friday of last week and are expected to receive them by Wednesday, April 15. Anyone who qualifies but has not submitted their direct deposit banking information is expected to receive a paper check at a later date. However, anyone who has not filed or made their banking information available may input their information in the IRS' new portal here.
Qualifying citizens are those who have reported an adjusted gross income of $75,000 or less. Filers of joint tax returns will receive a one-time payment of $2,400 and those will dependents will receive an additional $500 for each qualifying child. All others will receive the standard one-time payment of $1,200.
Meanwhile, Canada is providing its citizens who have lost their jobs due to the pandemic with up to four months of $2,000 CAD monthly payments. Australian citizens who have been furloughed from their jobs receive $1,500 AUD every two weeks. Newsweek reports that "Britain's government is issuing grants covering 80 percent of unemployed workers' salaries up to a total of £2,500 ($3,084) a month. The package also reportedly contains statutory sick pay for employees that have been told to self-isolate...Denmark has pledged to pay from 75 to 90 percent of employees' salaries up to a monthly amount of 26,000 Danish kroner ($3,288 USD)...France will pay 70 percent of an employee's gross salary to a monthly maximum of €6,927 ($7,575 USD)...Germany will pay 67 percent of net wages up to a maximum of €6,700 per month ($7,326.78 USD)....Ireland will give 70 percent of employee salaries up to a maximum of €410 per week ($448.36 USD)."
But sit tight and keep refreshing your bank account for that life-changing, crisis-averting one-time payment of $1,200...unless you're a U.S. college student who's still claimed as a dependent or a retiree who receives Social Security. Forget you guys.
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When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.