Is a New Stimulus Check Headed Your Way? Here Are 3 Smart Ways to Make the Most of It

Investopedia

15 Jan

Key Takeaways

About 1 million individual taxpayers will automatically receive payments in January of up to $1,400 per person, if they missed claiming a stimulus credit on their 2021 tax return.
Since the payments are per individual, a couple could receive $2,800, or a family of four, $5,600.
But you can turn those figures into much bigger amounts by stashing the money in a high-yield savings account, a top-paying money market account, or one of today's best nationwide CDs.
Rates are near historic highs right now, with dozens of options in the 4% range—and even one CD that's paying 5.50%.
We calculate below what you can earn with each strategy for different stimulus amounts and savings durations.

The full article continues below these offers from our partners.

Who Is Getting IRS Stimulus Checks in January?

Just before Christmas, the Internal Revenue Service (IRS) announced it would send automatic payments to about 1 million eligible taxpayers who missed claiming the 2021 Recovery Rebate Credit. The Recovery Rebate Credit was available to individuals who did not receive one or more Economic Impact Payments, also known as stimulus payments.

The maximum payment is $1,400, but those with incomes beyond a certain threshold may receive less. The payments are per individual, meaning an eligible married couple could receive up to $2,800, or a family of four might receive $5,600.

Fortunately, you probably don't have to figure this out on your own, or even fill out a form to get the money. The IRS has taken the step of identifying every eligible taxpayer who did not claim the credit, and if you are one of those individuals, the IRS will automatically send you the eligible amount. Payments can be expected this month, by either mailed check or direct deposit.

Didn't File a 2021 Tax Return? Read this

There is one group who needs to take an extra step in order to receive their credit payment. If you didn't file a 2021 tax return, you won't be eligible for payment. But there's good news: File your return by April 15 this year and you will still receive the stimulus payment.

3 Smart Strategies for Boosting Your Payment

Whether you're in line to receive a $1,400 payment, a $5,600 payment, or even more if you have a large family, putting that money in savings can build it into a more sizable sum. And now is a great time for stashing cash in the bank, since banks and credit unions are paying close to their highest rates in two decades.

Three safe, easy options are:

A top-paying high-yield savings account
A nation-leading money market account
A top nationwide certificate of deposit (CD)

We'll go over each of these options below, including how much each one can stretch your stimulus payment.

Option #1: A High-Yield Savings Account

One of the easiest ways to earn a great return on your cash is to dump it into one of the country's best high-yield savings accounts. We rank the highest-paying options every business day, and the top rate is currently 4.75% APY. Also, 11 more options are paying 4.50% or better. Compare that to big banks that pay virtually zero, or even the national average of just 0.42%.

Savings accounts let you deposit and withdraw at will, so you won't have to commit your funds for any particular duration. You can leave your money there for months, a year, or even longer. Or, if you need some of the cash, you are free to withdraw as needed.

All Federally-Insured Institutions Are Equally Safe

All of the institutions we feature for savings, money market, and CD accounts are federally insured by the FDIC for banks or the NCUA for credit unions. This means that your deposits—up to $250,000 per person and per institution—are federally protected.

Option #2: A Top-Paying Money Market Account

Money market accounts are very much like savings accounts, except they add a special feature: the ability to write paper checks. If this feature is useful to you, choose a money market account over a standard savings account. But if not, feel free to choose whichever product pays a better rate.

Right now, the best money market account in the country pays more than the best savings account, at 4.85%. So it's an excellent choice. For additional options, see our daily ranking of the best money market accounts, with about a dozen options to earn 4.00% APY or better.

Wonder how much you can earn with a high-yield savings or money market account? We run the numbers below for different stimulus amounts and different savings timelines in the top-paying accounts.

1-Person Household: $1,400 Payment
	Today's Top APY	Earnings After 1 Month	Earnings After 3 Months	Earnings After 6 Months	Earnings After 1 Year
Best savings account	4.75%	$5	$16	$33	$67
Best money market account	4.85%	$6	$17	$34	$68

2-Person Household: $2,800 Payment
	Today's Top APY	Earnings After 1 Month	Earnings After 3 Months	Earnings After 6 Months	Earnings After 1 Year
Best savings account	4.75%	$11	$33	$66	$133
Best money market account	4.85%	$11	$33	$67	$136

3-Person Household: $4,200 Payment
	Today's Top APY	Earnings After 1 Month	Earnings After 3 Months	Earnings After 6 Months	Earnings After 1 Year
Best savings account	4.75%	$16	$49	$99	$200
Best money market account	4.85%	$17	$50	$101	$204

4-Person Household: $5,600 Payment
	Today's Top APY	Earnings After 1 Month	Earnings After 3 Months	Earnings After 6 Months	Earnings After 1 Year
Best savings account	4.75%	$22	$65	$131	$266
Best money market account	4.85%	$22	$67	$134	$272

Option #3: A Certificate of Deposit

If you can manage without some of your savings for a little while, you could do even better with a certificate of deposit (CD). CDs sometimes pay more than savings and money market accounts, but they offer a unique value thanks to their fixed annual percentage yields (APYs). Savings and money market APYs are variable—the bank can lower its rate anytime it wants.

In contrast, a CD rate is yours to keep until the end of its maturity term—whether that's 3 months, 5 years, or anything in between. Right now, rates are high. So, locking in a CD rate means you'll be guaranteed one of today's elevated rates for months or even years down the road.

You can shop the best nationwide CDs in our daily ranking, with top rates currently ranging as high as 5.50% (for a special 8-month promotional CD). Otherwise, the top rates across CD terms are in the mid-to upper-4% range.

To see how much you can earn by socking away your stimulus payment in a CD, review our calculation table below.

Choose your CD term carefully, as you'll be hit with an early withdrawal penalty if you need to cash out the balance before it matures.

Earnings from Depositing Stimulus Payments in a Top-Paying CD
	Today's Top APY	Duration Held (Months)	$1,400 Payment	$2,800 Payment	$4,200 Payment	$5,600 Payment
Best 3-month CD	4.70%	3	$16	$32	$49	$65
Best 6-month CD	4.85%	6	$34	$67	$101	$134
Special 8-month CD	5.50%	8	$51	$102	$153	$203
Best 1-year CD	4.50%	12	$63	$126	$189	$252
Best 18-month CD	4.50%	18	$96	$191	$287	$382
Best 2-year CD	4.40%	24	$126	$252	$378	$504

Daily Rankings of the Best CDs and Savings Accounts

We update these rankings every business day to give you the best deposit rates available:

Best High-Yield Savings Accounts

Best Money Market Accounts

Best 3-Month CD Rates

Best 6-Month CD Rates

Best 1-Year CD Rates

Best 18-Month CD Rates

Best 2-Year CD Rates

Best 3-Year CD Rates

Best 4-Year CD Rates

Best 5-Year CD Rates

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that's below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

IRS. "News release, Dec. 20, 2024."
Federal Deposit Insurance Corporation. "National Rates and Rate Caps."

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