Investing

The Federal Reserve raised interest rates by a quarter of a point at the end of its two-day policy meeting.
This 0.25 percentage point hike marks the 10th time the Fed has raised its benchmark interest rate over the past year or so, the fastest pace of tightening since the early 1980s.
A wide range of borrowing costs — from mortgages and credit cards to auto loans and student debt — are affected by the rate increase.

The Federal Reserve Bank building
Kevin Lamarque | Reuters

What the federal funds rate means to you

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and saving rates they see every day.
This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

Here’s a breakdown of how it works:

How higher rates are affecting your wallet

Credit cards
Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles.
Credit card annual percentage rates are now over 20%, on average, an all-time high. With most people feeling strained by higher prices, more cardholders carry debt from month to month.
“Now people are racking up debt and borrowing at high rates and that’s troublesome,” said Tomas Philipson, University of Chicago economist and a former chair of the White House Council of Economic Advisers.
With this rate increase, consumers with credit card debt will spend an additional $1.7 billion on interest, according to an analysis by WalletHub. Factoring in the hikes between March 2022 and March 2023, credit card users will wind up paying at least $31.7 billion in extra interest charges over the next 12 months, WalletHub found.
Home loans

Boonchai Wedmakawand | Moment | Getty Images

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
Rates are now off their recent peak, but not by much. The average rate for a 30-year, fixed-rate mortgage currently sits at 6.48%, according to Bankrate, down slightly from November’s peak but still much higher than it was a year ago.
“This goes to show just how hard it is for many buyers to overcome today’s persistently high home prices and mortgage rates,” said Jacob Channel, senior economic analyst at LendingTree.
Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. Already, the average rate for a HELOC is up to 7.99%, according to Bankrate.
Auto loans
Even though auto loans are fixed, payments are getting bigger because the prices for all cars are rising along with the interest rates on new loans. So if you are planning to buy a car, you’ll shell out more in the months ahead.
The average rate on a five-year new car loan is now 6.58%, according to Bankrate.
The Fed’s latest move could push up the average interest rate even higher, right at a time when borrowers are already struggling to keep up with bigger monthly loan payments.
Student loans

Kameleon007 | Istock | Getty Images

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-year Treasury notes later this month.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects to happen sometime this year.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.
Savings accounts and CDs
While the Fed has no direct influence on deposit rates, those tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom for years, are currently up to 0.39%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.5%, much higher than the average rate from a traditional, brick-and-mortar bank, according to Bankrate.

Rates on one-year certificates of deposit at online banks are closer to 5%, according to DepositAccounts.com.
With more economic uncertainty ahead, consumers should be taking aggressive steps to secure their finances — including paying down high-interest debt and boosting savings, McBride advised.
“Grabbing a 0% credit card balance transfer offer or putting your emergency fund in a high-yield online savings account are good first steps.”
Subscribe to CNBC on YouTube. More

Credit card interest rates are already at record highs and are expected to increase even more if the Fed raises its benchmark rate this week.
Fortunately, consumers hit with a high annual charges have options.

Zeynepkaya | E+ | Getty Images

It’s an especially expensive time for people with credit card debt, and the pain will likely only worsen with another expected interest rate hike coming from the Federal Reserve this week.
Interest charges on credit cards tend to move with the Fed’s benchmark rate. The current national average rate on plastic is already more than 20%, which is the highest it has been in decades.

“Many people we speak with are feeling squeezed,” said LaDonna Cook, a manager at GreenPath Financial Wellness, a national nonprofit debt counselor.
Here’s what consumers need to know about the rising rates on their cards — and what they can do about it.

Your interest rate could increase within a month

In an effort to combat inflation, the Fed has already raised its rate nine times over the past year or so, explaining why interest rates on credit cards are this high.
“Rates jumped more in 2022 than any other year on record,” said Ted Rossman, senior industry analyst at Bankrate. He added that “rates will probably go slightly higher from here.”
If there’s another hike this week from the central bank, consumers can expect to see their credit card rate inch up “within a month or two,” Rossman said.

More from Personal Finance:73% of millennials are living paycheck to paycheckAmericans are saving far less than normalA recession may be coming — here’s how long it could last
It’s more important than ever to be aware of the interest you’re paying. Some card issuers are charging “eye-popping” rates, Rossman said. For example, First Premier Bank charges annual percentage rates as high as 36%.
Your credit card statement should list your interest rate, and you can also find it online by logging into your account, Rossman said.
The rate doesn’t really matter, he said, if you pay off your credit card balance every month.
However, if you don’t do that, “interest costs can be steep and accumulate quickly,” Rossman said.

There are ways to pay less interest

For those struggling with credit card debt, Rossman said he recommends first looking to see if you qualify for a so-called 0% balance transfer card.
These cards allow you to move your existing debt on to a new card, with an introductory period in which you don’t pay any interest (although there’s usually a fee to do the transfer).
“You can avoid interest for up to 21 months,” Rossman said.

Another option is taking out a personal loan and using the funds to pay off your credit card debt. You’ll have a new monthly payment from the loan, but if your credit is good, the interest rate may be as low as 7%, Rossman said.
For those with a lower credit score and a lot of debt, a reputable nonprofit credit counseling agency, like Money Management International, can match you with debt-management plans with rates as low as 7%, he said.
GreenPath manager Cook said you can also try asking your credit card issuer if it will lower your interest rate. “If your credit is less than optimal, consider building [it] up before making the request,” she said.

Paying a little more each month can go a long way

Cardholders should also consider paying just a little more than the minimum payment each month to save time and interest, Rossman said.
He provided this example: If someone paid only the smallest possible payment each month toward their credit card balance of $5,805 (the national average), they’d be in debt for more than 17 years and in excess of $8,300 in interest, assuming they were getting dinged the average current interest rate of more than 20%.
But if they paid just an extra $50 a month their timeline would drop to six years and they’d save $5,000 in interest charges. More

An Asian American, Native Hawaiian and Pacific Islander woman has to work 15 months to earn what a white man makes in one year, according to the National Women’s Law Center.
But that doesn’t tell the whole story. 
The reality is, “she is never, ever going to catch up,” says Jasmine Tucker, director of research at the National Women’s Law Center. 

Some consider April 5 equal pay day for Asian American, Native Hawaiian and Pacific Islander women, marking the point into the new year that the average AAPI woman has to work to make the same pay white men earned in 2022.
In other words, an AAPI woman has to work 15 months to earn what a man makes in one year, according to an analysis by the National Women’s Law Center. But that doesn’t tell the whole story, cautioned Jasmine Tucker, the NWLC’s director of research. 

The reality is, “she is never, ever going to catch up,” Tucker said.
More from Personal Finance:Mastering this skill is the ‘hardest part’ of personal finance73% of millennials are living paycheck to paycheckAmericans are saving far less than normal
Although AAPI — also referred to as AANHPI — communities together constitute the fastest-growing ethnic group in the U.S., “systemic barriers to equity, justice and opportunity put the American dream out of reach of many,” according to the Biden administration.
During the pandemic, AAPI women endured disproportionately more job losses and were more likely to have child-care needs impact their ability to work.
At the same time, persistent gender inequities suppressed wages and caused a crisis in savings as inflation took hold, Tucker said. “Some of these women are still digging out,” she added. “Another recession at this point is a really scary prospect.”

Pay gap worsens for some AAPI communities

Today, AAPI women are typically paid just 92 cents for every dollar paid to white men, although the pay gap varies significantly for some AAPI communities.
For example, Bhutanese women working full time earn just 48 cents compared to white men.
Over time, that inequality is magnified. Based on today’s wage gap, an AAPI woman just starting out will lose $267,760 over a 40-year career, according to the NWLC’s analysis.

Some of these women are still digging out. Another recession at this point is a really scary prospect.

Jasmine Tucker
director of research, National Women’s Law Center

For Bhutanese women, the lifetime wage gap totals more than $1.3 million, and for Burmese women, the losses are close: $1.2 million.
Nepalese women also lose more than $1.1 million, and Hmong and Cambodian women lose more than $1 million dollars to the wage gap over the course of their careers, the nonprofit advocacy group found.
That translates into many “missed opportunities for wealth building,” Tucker said, like the ability to buy a home, pay for their children’s education, start a business or save for retirement.
There are, however, four groups of AAPI women working full time who make more than white men — including Chinese women, Indian women, Malaysian women and Taiwanese women — and yet, these women still make less than men in their own respective communities. 

There are initiatives that can help, Tucker added, like the Paycheck Fairness Act, which aims to eliminate pay discrimination and strengthen workplace protections for women, and pay transparency laws, which require employers to list their minimum and maximum salary ranges on publicized job postings.
The idea is that pay legislation will bring about pay equity, or essentially equal pay for work of equal or comparable value, regardless of worker gender, race or other demographic category.
With or without legal requirements, “there’s a lot we could do,” Tucker said.
Subscribe to CNBC on YouTube. More

When asked to take a 13-question quiz on Social Security, most near-retirees ages 55 to 65 did not get a passing grade.
Yet members of that age cohort still expect the program to be their biggest source of income in retirement.
Find out how much you know about the program before you claim.

Fotostorm | E+ | Getty Images

Most Americans nearing retirement expect Social Security to be their biggest source of income.
Yet many of those people, ranging in age from 55 to 65, are unaware of the basics about the program, according to new research from MassMutual.

About 43% of the 1,500 people surveyed do not know how much of their income will come from Social Security benefits.
The results to that answer were “stunning” for a cohort so close to their retirement years, said David Freitag, a financial planning consultant and Social Security expert at MassMutual.
More from Personal Finance:73% of millennials are living paycheck to paycheckAmericans are saving far less than normalA recession may be coming — here’s how long it could last
In addition, the firm posed a 13-question true/false quiz to the respondents. The result: 69% either barely passed or failed. More than one-third — 35% — of respondents failed. Meanwhile, more than one third — 34% — just passed with a grade of D.
Most respondents, 84%, know their benefits will be reduced if they claim benefits early.

But about half of respondents still do not know how long it pays to wait to claim.
“There’s no tangible reason why anybody would ever wait past age 70,” Freitag said.

To see how well you would do on the quiz, decide whether the statements below are true or false, and compare your answers to the key below.
True or False:

In most cases, if I take benefits before my full retirement age, they will be reduced for early filing.
If I am receiving benefits before my full retirement age and continue to work, my benefits might be reduced based on how much I make.
If I have a spouse, he or she can receive benefits from my record even if he or she has no individual earnings history.
Generally, if I am in a same-sex marriage, there are different eligibility requirements when it comes to Social Security retirement benefits.
If I have a spouse and he or she passes away, I will receive both my full benefit and my deceased spouse’s full benefit.
The money that comes out of my paycheck for Social Security goes into a specific account for me and remains there, earning interest, until I begin to receive Social Security benefits.
If I file for retirement benefits and have dependent children aged 18 or younger, they also may qualify for Social Security benefits.
If I get divorced, I might be able to collect Social Security benefits based on my ex-spouse’s Social Security earnings history.
Under current law, Social Security benefits could be reduced by 20% or more for everyone by 2035.
Under current Social Security law, full retirement age is 65 no matter when you were born.
If I delay taking Social Security benefits past the age of 70, I will continue to get delayed retirement credit increases each year I wait.
Social Security retirement benefits are subject to income tax just like withdrawals from a traditional IRA account.
I must be a U.S. citizen to collect Social Security retirement benefits.

Coldsnowstorm | E+ | Getty Images

Answers:

True (84% answered correctly)
True (77%)
True (72%)
False (69%)
False (65%)
False (60%)
True (56%)
True (56%)
True (55%)
False (53%)
False (49%)
False (38%)
False (29%) More

On College Decision Day, one key consideration should be picking a school that doesn’t require taking on too much student debt, experts say.
Pulling from savings, looking for aid and working while in school are all additional strategies to help students stay out of the red.

Steve Prezant | The Image Bank | Getty Images

May 1 is College Decision Day, the deadline many schools set for students to decide which college they will attend. One key consideration should be picking a school that doesn’t require taking on too much student debt, experts say.
“Families are increasingly getting price-sensitive when choosing a college,” said higher education expert Mark Kantrowitz. “This includes students.”

Kantrowitz has found in his research that less than a third of student loan borrowers who took out less than $20,000 were stressed by their debt, compared with more than 60% of those who’d taken out $100,000 or more.
More from Personal Finance:73% of millennials are living paycheck to paycheckAmericans are saving far less than normalA recession may be coming — here’s how long it could last
The general rule of thumb is not to borrow more than you expect to earn as a starting annual salary, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
That figure will vary based on what you plan to study. You can look up annual average incomes for different occupations at the U.S. Department of Labor’s website.
Kantrowitz also stands by that metric. “If your total student loan debt at graduation is less than your annual starting salary, you should be able to repay your loans in 10 years or less,” he said.

Here are four strategies high school seniors, and their families, can consider to avoid ending up deep in debt.

1. Pick a college wisely

In the 2022-23 academic year, the average estimated annual costs for full-time undergraduate college students, including tuition, room and board, was $27,940 at an in-state public school and $57,570 at a private nonprofit, according to the College Board.
That difference between the two is notable.
“To reduce student loan debt, enroll at a less expensive college,” Kantrowitz said, adding that public colleges often “provide just as good a quality of education.”
Financial aid matters, too. The so-called sticker price may be more than what families end up paying. Dig into your award letters for information.

If the first year of tuition is a struggle and requires the family to borrow debt, there is a high chance that pattern will continue for future years.

Elaine Rubin
director of corporate communications at Edvisors

When trying to get a sense of what a school will cost over the course of a degree, “families need to look at the big picture,” said Elaine Rubin, director of corporate communications at Edvisors.
“If the first year of tuition is a struggle and requires the family to borrow debt, there is a high chance that pattern will continue for future years,” Rubin said.
A college’s cost typically only increases between years, she added.
You can find information about a school’s tuition increases on the U.S. Department of Education’s College Affordability and Transparency List, “which identifies not only which colleges have the highest and lowest net prices,” Rubin said, “but also shows increases from year-to-year.”
The “net price” is the amount you’ll have to pay with savings, income and loans to cover the bill, after aid that doesn’t need to be repaid, including grants and scholarships, is accounted for.
If one college is offering more generous grants than another school, that should also be taken into consideration, experts say.

2. Pull from savings

Andresr | E+ | Getty Images

Some families have salted away money for their children’s college costs.
At the end of 2022, the average 529 plan account balance was $25,630, according to Kantrowitz. Those state-sponsored investment plans allow families to contribute money and then withdraw it tax-free, so long as the money is used for qualifying education expenses.
Those funds can go a long way at reducing how much a student will need to borrow. Kantrowitz has said that 529 savings don’t make a significant impact on aid, either.
Families can continue saving in a 529 plan while their child is enrolled in college, Kantrowitz said.
“This is particularly useful if your state offers a state income tax break on contributions to the state’s 529 plan,” he said. “That’s like earning a discount on tuition.”

3. Look for aid that doesn’t need to be repaid

Many students who are eligible for the federal Pell Grant program miss out on the aid because they don’t apply for it, Mayotte said in a previous interview with CNBC.
In the 2022-2023 academic year, Pell Grants range from a minimum of $692 to a maximum of $6,895, depending on how much it is calculated that a student’s family will be able to contribute to their college costs, Kantrowitz said.
To qualify for a Pell Grant, you have to submit the Free Application for Federal Student Aid, or FAFSA, form.
Meanwhile, more than $6 billion in scholarships are awarded to college students each year, according to Kantrowitz. It’s not too late to seek out such awards.

Scholarships are gifts that don’t need to be repaid, and there are thousands of them offered. Some of the awards are based on merit while others are granted because of financial need.
Students can use free scholarship matching services to search for the awards, Kantrowitz said. Some of the services he recommends include Fastweb and the College Board’s Big Future. According to the Education Department, students also should ask both their high school counselor and the college’s financial aid office about scholarship opportunities.
The Labor Department also has a scholarship search database. 
According to calculations by Kantrowitz, around 1 in 8 college students has won a scholarship. The average award is around $4,200. Around 0.1% of undergraduate students received $25,000 or more in scholarships.

4. Find work while in school

Working a part-time job while in college can help students manage costs, experts say. But they need to make sure they don’t overdo it.
Putting in 12 hours or less per week has positive impacts, but “every additional hour cuts academic performance,” Kantrowitz said. Meanwhile, students who try to work full time while in college are half as likely to graduate on time or even within six years.
“Working on-campus or near-campus, students may find employers with flexible scheduling to accommodate a college student’s schedule,” Rubin added. More

Series I bonds will pay 4.3% annual interest through October, a drop from 6.89% in November, amid falling inflation.
With the fixed portion of the rate at 0.9%, which stays the same after purchase, I bonds have become more attractive to long-term investors.
But shorter-term investors may consider alternatives, such as certificates of deposits and Treasury bills.

Series I bonds will pay 4.3% annual interest through October, a drop from 6.89% in November amid falling inflation, the U.S. Department of the Treasury announced on Friday.
There are two parts to I bond interest rates: a fixed rate that stays the same after purchase, and a variable rate, which changes every six months based on inflation. Starting May 1, the new variable rate is 3.38% and the fixed rate is 0.9%.

While experts predicted the 3.38% variable rate, the fixed rate, which jumped to 0.9% from 0.4% in November, “definitely makes it attractive for long-term investors,” said Ken Tumin, founder and editor of DepositAccounts.com.
More from Personal Finance:Series I bond rates fall to 4.3% amid cooling inflationAs demand soars for I bonds, TreasuryDirect gets a makeoverWhen it makes sense to buy extra paper Series I bonds with your tax refund
The Treasury doesn’t disclose how it determines the fixed rate for I bonds every six months, but experts think factors like demand and the yield from Treasury inflation-protected securities may factor in.
The 0.9% fixed rate is the highest since November 2007, when I bonds offered 1.2%, Tumin said, noting the new rate was a “pleasant surprise.”
You can buy I bonds online through TreasuryDirect, limited to $10,000 per calendar year per investor. And it’s possible to buy an extra $5,000 in paper I bonds with your federal tax refund.

However, you can’t access the money for one year and you’ll lose the last three months of interest by redeeming within five years.

I bonds less attractive for the short-term

While I bonds may still appeal to longer-term investors, the 4.3% annual rate may be less attractive to those with shorter-term goals, experts say.
“I bonds were the only game in town for two years,” said Jeremy Keil, a certified financial planner at Keil Financial Partners in Milwaukee. “And now they’re just part of the mix.”
After a series of interest rate hikes from the Federal Reserve, options like certificates of deposit, Treasury bills, money market accounts and high-yield savings accounts have become relatively safe alternatives for shorter-term savings.

If you’re just trying to buy an interest rate for six months or a year or two, I bonds are not the way to go.

Jeremy Keil
Financial advisor at Keil Financial Partners

As of May 1, the top 1% average of one-year certificates of deposit were paying 5.18%, according to DepositAccounts. Two- to six-month Treasury bill yields were also above 5% as of May 1.
Keil said I bonds are now more of a “strategy investment” for those who want to know how much they’re earn above inflation for the long run.
“If you’re just trying to buy an interest rate for six months or a year or two, I bonds are not the way to go,” he said. “It’s the CDs and the money markets, things like that.” More

The Federal Reserve is still expected to hike rates by one-quarter of a percentage point at this week’s policy meeting.
Borrowing rates are already at fresh highs.
Here’s a breakdown of how the Fed’s moves have been affecting your monthly expenses and savings.

Average credit card rates top 20%

Most credit cards come with a variable rate, which has a direct connection to the Fed’s benchmark rate.
After a prolonged period of rate hikes, the average credit card rate is now more than 20% on average — an all-time high, while balances are higher and nearly half of credit card holders carry credit card debt from month to month, according to a Bankrate report.
“Yet another rate hike from the Fed means today’s sky-high credit card interest rates will rise even further in the very near future,” said Matt Schulz, chief credit analyst at LendingTree. Cardholders should expect their current cards’ interest rates to rise in the next billing cycle or two, he said.

Mortgage rates now average around 6.5%

Peopleimages | Istock | Getty Images

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage currently sits at 6.48%, according to Bankrate, down slightly from November’s high but still much higher than it was a year ago.
“While borrowers can save money relative to what they would have paid for a mortgage a few months ago, they’re still going to be shelling out much more than they would have had they bought a home at the start of last year,” said Jacob Channel, senior economic analyst at LendingTree.
“All in all, there’s no getting around just how tough today’s housing market is for many people to break into and navigate.”

They’re still going to be shelling out much more than they would have had they bought a home at the start of last year.

Jacob Channel
senior economic analyst at LendingTree

Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rises, the prime rate does, as well, and these rates follow suit. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.99%, according to Bankrate.

Auto loan rates rose to more than 6.5%

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average rate on a five-year new car loan is now 6.58%, according to Bankrate.
Keeping up with the higher cost has become a challenge, research shows, with more borrowers falling behind on their monthly loan payments.

Federal student loans are already near 5%

Wavebreakmedia | Istock | Getty Images

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-Year Treasury notes later this month.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects to happen sometime this year.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.

Deposit rates at some banks are up to 4.5%

While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.39%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.5%, according to Bankrate.
However, if this is the Fed’s last increase for a while, then deposit rate hikes are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.

But “it’s not too late,” said Greg McBride, chief financial analyst at Bankrate.com. “We may not see much more in the way of improvement but there’s still a substantial advantage,” he said of switching to a high-yield savings account.
“There’s no advantage to staying where you are if you haven’t benefited from rising rates.”
Subscribe to CNBC on YouTube. More

If you’re one of the nearly 1.5 million people with an unclaimed tax refund from 2019, the last chance to file your return is July 17, according to the IRS.
Those refunds are worth almost $1.5 billion in total, with a median payment of $893, the agency said.

Valentinrussanov | E+ | Getty Images

The 2022 federal tax deadline has passed for most Americans, but another key date is approaching for past-due filers.
If you’re one of the nearly 1.5 million people with an unclaimed tax refund from 2019, the last chance to file your return is July 17, according to the IRS.

Those refunds are worth almost $1.5 billion in total, with a median payment of $893, the agency said. There’s a state-by-state breakdown of median potential refunds for 2019 here.
More from Personal Finance:Series I bond rates fall to 4.3% amid cooling inflation3 smart ways to prepare for next year’s taxes nowAmericans are saving far less than normal in 2023. Here’s why
Typically, there’s a three-year deadline to claim refunds for unfiled returns before the money becomes the property of the U.S. Department of the Treasury. In most years, that deadline coincides with the federal tax filing deadline. But there’s extra time for 2019 due to the Covid-19 pandemic.
“The 2019 tax returns came due during the pandemic, and many people may have overlooked or forgotten about these refunds,” IRS Commissioner Danny Werfel said in a statement. “We want taxpayers to claim these refunds, but time is running out.”
With the 2019 tax deadline extended until July, Werfel said, many Americans, particularly lower earners such as students and part-time workers, may have accidentally skipped the filing.

“People get scared and think it’s going to be harder than it really is,” said certified financial planner John Chichester Jr., founder and chief executive of Chichester Financial Group in Phoenix. “And they don’t realize that they’re leaving money on the table.”

People get scared and think it’s going to be harder than it really is, and they don’t realize that they’re leaving money on the table.

John Chichester Jr.
Founder and CEO of Chichester Financial Group

For example, low- to moderate-income workers may qualify for the so-called earned income tax credit, which provides a tax break even without a balance due.
But for workers with a relatively simple tax situation, such as W-2 income and without a business, “it’s quite easy to file your taxes,” said Chichester, who is also a certified public accountant.

How to start past-due 2019 returns

If you’re feeling overwhelmed by an unfiled return, experts say to begin by gathering documents.
“Taxpayers can request copies of tax documents from employers and other sources like loan service providers,” said Kathy Pickering, chief tax officer for H&R Block. “Sometimes documents were provided electronically and are still available on demand.” 
Another way to access older tax documents is through your IRS online account, she said.

You can login to download IRS transcripts, such as the wage and income transcript, which includes W-2s and 1099s. You can access IRS transcripts for the current season and three prior years. “For many taxpayers, this is by far the quickest and easiest option,” the IRS said in a statement.
And if you have multiple years of unfiled returns, Chichester’s advice is to just get started with 2019. “Sometimes it can be daunting if you have multiple years,” but completing 2019 may make it easier to move on to the next one, he said. More