5 Big Money Moves for Your Stimulus Check

Lee Huffman
·6 min read

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Americans should be seeing a little extra dough in their bank accounts soon. Between tax refunds and the CARES Act stimulus checks, the average household can expect to receive several thousand dollars to improve their finances.

While some people will splurge on a vacation or a trip to the mall with their stimulus money, others are choosing to make big money moves with their stimulus checks. They can use the money to earn a new account bonus, pay off debt or invest for the future.

How Much Is the Stimulus Check?

The American Rescue Plan of 2021 was signed into law to provide direct economic assistance to American workers and families. Taxpayers can receive up to $1,400 per dependent, based on their qualified income. This means that a middle-class family of four will receive a stimulus check of $5,600.

Individuals must have an Adjusted Gross Income (AGI) of $75,000 or less and couples with AGIs of $150,000 or less to receive the full benefit. The benefit is phased out for incomes up to $80,000 and $160,000 for individuals and couples, respectively. Incomes above those amounts do not qualify.

5 Ways to Use Your Stimulus Check

When your stimulus check arrives, this provides an excellent opportunity to make a dramatic impact on your finances. These five big money moves below can help you make money, eliminate interest and invest in your future.

Earn a New Bank Account Bonus

Many banks offer a bonus when you open a checking or savings account and meet certain criteria. These criteria may include meeting a minimum deposit amount, having direct deposit from your paycheck, using a debit card to make purchases or performing other qualifying banking activities. After you meet the requirements and keep your account open for a specified period of time (usually 3-6 months), you’ll receive your bonus.

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New bank account bonuses can be worth several hundred dollars, so they’re a worthy investment of a few minutes of your time. If you have enough money and the time, you can even open accounts with different banks to earn multiple bonuses. Unlike credit card bonuses, there aren’t rules like Chase 5/24 to keep you from earning bonuses from multiple banks.

Create an Emergency Fund

A 2018 Federal Reserve study found that the average American cannot afford a $400 emergency without going into debt. While you’re earning a new bank account bonus, consider using your stimulus check and any bank bonuses that you earn to create your emergency fund. This will ensure that the next time an emergency strikes, you’ll have the cash available to pay the bill without tapping into expensive credit card debt.

Pay Off Your Debts

The average interest rate on a credit card is over 16%. If you’re carrying a balance month-to-month, the interest charges can be really expensive and difficult to pay off. When you take your stimulus check and pay off your credit card balances, you’re earning a guaranteed 16% on your money by avoiding that interest. Best of all, the savings are not taxable!

For people that owe more money than what they receive from their stimulus check, look into a consolidation loan or a 0% APR offer with a new balance transfer credit card. Consolidation loans lock in a fixed interest rate and require monthly payments over a set period of time. Balance transfer promotions offer a no-interest loan for a small fee to enable all of your payments to reduce your balance with each monthly payment. Both of these options can reduce your interest rate significantly and put you on the path to becoming debt-free.

Fund Your IRA

The majority of Americans are behind in saving for retirement. With the maximum IRA contribution limit of $6,000, your stimulus check can almost max out this year’s contribution. Traditional IRAs can offer a tax deduction, while Roth IRAs provide tax-free income in retirement. Whichever you choose, your future self will thank you for making a contribution today.

On a related note, many people don’t know about this awesome retirement planning hack. If you haven’t filed your taxes yet, you can still contribute to your Traditional or Roth IRA for last year. So, open your IRA today and fund last year’s contribution. Then you can start making monthly contributions now for this year to build a solid retirement for yourself.

Invest in a Brokerage Account

Investing your money in a brokerage account is an excellent choice for people who’ve maxed out their retirement plans or if they want to retire early. Brokerage accounts allow you to invest in stocks, bonds, mutual funds, ETFs, cryptocurrency, and more.

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Any money that you invest in a brokerage account can be withdrawn at any time without penalty. Unlike a retirement account, like a 401(k) or IRA, brokerage account money is not locked up until retirement age. Savvy investors often have brokerage accounts in addition to their retirement accounts. These accounts are often dedicated to goals that are 10-20 years out, like a vacation home or a child’s education.

Boost Your Career

One of the best investments you can make is in yourself. To move forward in your career, you may need to finish your degree, earn a certification or attend conferences where you can network with your peers. The stimulus checks are a great way to fund those career moves without going into a lot of debt.

If earning a degree or certification aren’t in the cards right now, consider taking free or low-cost classes from Udemy, Khan Academy, or MIT OpenCourseWare. These online platforms allow you to take a variety of courses to learn new skills or just for fun. Taking free or low-cost courses are also the perfect way to try out new subjects. You can take a class or two before committing time and money towards a degree or certification that you’re considering.

The Bottom Line

The American Rescue Plan Act of 2021 is giving most Americans $1,400 to stimulate the economy. For an eligible family of four, you’ll receive up to $5,600 in the next few weeks. Rather than spend the money on a vacation or a shopping trip, use this extra money to improve your finances. Earning a new account bonus, paying off debt, or investing in your future are all excellent ways to maximize your stimulus check.

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While we work hard on our research, we do not always provide a complete listing of all available offers from credit-card companies and banks. And because offers can change, we cannot guarantee that our information will always be up to date, so we encourage you to verify all the terms and conditions of any financial product before you apply.