INDIANAPOLIS – More than 80 million Americans have already received their stimulus payment. If you received a stimulus check or a tax refund, what are the best things you can do with the money if you owe on bills? And if you decide to catch up on bills, which ones should you pay? The answer is it’s different for everyone.
“You want to do some research to figure out which ones you can defer with no penalty accruing. For example, your energy provider may allow you to defer payments for the next couple of months with no late payment fees—that’s a great one to defer. If you have private student loans, you may want to pay those as well,” says Andrea Woroch, consumer savings expert.
Woroch says many private loan companies allow deferments, but unlike public loans, they may charge you interest on interest, so you pay more in the long run.
If you pay credit cards, look for a credit card that offers zero interest on balance transfers. Some of these promotional deals will allow you to defer interest on that balance transfer for up to 21 months. But be sure to pay off the entire balance before the interest free deadline is up. If you don’t, you will probably get hit with all that interest at once!
Some people may want to save for future needs, like if there’s a medical emergency or if your car breaks down.
“We don’t know the long-term economic impact of this coronavirus outbreak, so I encourage everyone out there, regardless of your financial situation right now, to save some of your stimulus check or refund,” says Woroch.
You can also make money by spending money. Refinancing your mortgage, depending on your loan, can save major money from just a one percent difference in a mortgage rate. Like a lot of people, Woroch did that very thing.
“We are going from a 4.5% down to 3.5% interest rate. With that, we are lowering our monthly payment by $400 and for a lot of Americans, that extra $400 a month can come in real handy right now,” said Woroch.
In general, there are fees with refinancing, so shop around.
Also, it may seem odd, but this is a good time to create a will.
“You need a will, you need a trust, you need that estate plan, and you can do it online. It doesn’t take more than 10 minutes to set up a will online through sites like Trust and Will. You can print out all your own documents right from your home computer. That can give you peace of mind, and it’s one less thing to think about,” said Woroch.
If you still haven’t gotten a stimulus check or your return and are expecting it, you can go to the IRS website to track it.