Overdraft Accounts Receiving Stimulus Checks Should Prepare for Refund Reversal

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A photo shows hundred dollar bills and a United States Treasury check, symbolizing the second economic relief package for the COVID-19 pandemic.
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January 25, 2021

On Sunday, December 27, former president Trump signed the second COVID-19 relief package, a $900 billion deal that included $600 stimulus checks. The checks began dropping into bank accounts in the final days of 2020, and the deadline for checks to be sent was January 15, so some may still be en route. 

For the most part, consumers should expect to have full access to those funds. However, people who receive the checks when their accounts are overdrafted may run into some issues in a month or so.

How can Cushion help me?
Cushion Bill Pay gives you more visibility and control over your finances than ever before. Many people get hit with bank fees—such as overdrafts and late fees—due to cash flow problems. With Cushion, you can consolidate and track all of your bills and BNPL payments in one place, plan your budget by reviewing what’s coming down the pike, and avoid overdraft fees by temporarily pausing payments that might overdraft your account and resuming them when you are ready.


A New York Times article reports that there is no rule saying banks can’t garnish part or all of individuals’ stimulus checks to cover overdraft charges and other penalties. Larger banks such as JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America have stated that they will temporarily top off overdrafted accounts so customers have full access to their stimulus checks. This is ideal for people who need the funds to pay for rent, utilities, food, and other necessary expenses. 

Smaller or regional banks may take different approaches. Like the larger banks, they could temporarily zero out customers’ overdrawn accounts and rescind that hold in a few weeks. Some may automatically and permanently remove overdraft charges, while others could require customers to call and request a fee refund in order to access their full stimulus check.

What to Expect

In about a month, customers whose accounts were automatically zeroed out can expect those temporary refunds to be withdrawn, sending them back into overdraft unless they’ve settled the charges. 

The same thing happened after the first round of stimulus checks, as was reported in a previous Cushion article. That time, some people were caught off guard when previous overdraft charges were unexpectedly added back to their accounts. 

One Cushion user had said, “They were trying to get around whatever they were supposed to do. Whenever I called the bank, because that forced me into three more overdrafts, I said, ‘What is this?’ The guy said, ‘We couldn’t deposit anything if it was going to cover fees, so we held it and then decided to push it through your account,’ which then caused fees for who knows how many people.” 

At least 1,300 Cushion users experienced a similar situation. Another user incurred only one overdraft fee between the time that their bank temporarily refunded the fees and then pulled the refund back out. After the refund was rescinded, the user incurred 13 overdraft fees within the next seven days.

This time around, it’s important for people to be prepared for however their bank may handle their fees and stimulus check deposits.

How to Prepare

Each bank operates differently, and each person’s finances are entirely unique. To ensure you know where your stimulus check is going and what’s going to happen to your account in a month’s time, here’s what you should consider. 

How is your bank handling stimulus checks?
Contact your bank to find out if they will automatically zero out your account then remove the hold in a month, or if you have to request a fee refund in order to access your stimulus check without the funds being automatically applied to penalties. 

Cushion can help you get your fees refunded no matter how your bank will handle the deposit.


When will your bank add overdraft charges back to your account?
If your bank automatically zeroed out your account for the stimulus check, make sure you know exactly when the original overdraft charges will be added back to your account. If the bank removes the money and you try to make a purchase soon after, you could end up further in the red. 

How are you going to settle your overdraft balance?
Spend this time assessing how you will bring your account back positive once the hold is removed. Do you want part of your stimulus check to settle your overdraft fees, are you able to find another source of income to cover the penalties, or will you have Cushion negotiate a refund on your behalf?

Last Updated on July 07, 2023
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Disclaimer: The information provided in this website is for educational purposes only and should not be considered as financial advice. Consult with a financial professional for personalized guidance regarding your specific situation.
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