Child tax credit money: Make a plan now for how to use the payments when they


How could you spend your child tax credit payments?

Sarah Tew/CNET

As soon as July,  you could receive the first payment as part of the expanded child tax credit that is part of March’s American Rescue Plan package. Normally, you’d get the tax credit back after you file your income taxes each year, but with President Joe Biden’s March stimulus bill, this year you’ll get the money in a series of payments through the end of 2021 and into 2022, if you and your family qualify. In total, you could receive up to $3,000 or $3,600 per child, depending on their age. This child credit is in addition to the payments included in the American Rescue Plan, such as the third round of stimulus checks. The question is, what do you do with the money? 

These payments can be an opportunity to get your financial house in order to make sure your family — including your children — is on a more solid footing. To help you consider the different ways you can use these payments, we spoke with financial experts and credit counselors for their recommendations on ways to use this money, from meeting urgent needs and paying down debt to building up an emergency fund. This expansion of the child tax credit is part of a larger multitrillion-dollar effort by President Joe Biden’s administration to lift the country out of the pandemic and put individuals and families on better economic footing. This child tax credit is a key piece of Biden’s plan to get money into the pockets of families who need it most.

Of course, the money comes with no strings attached, and you can use it as you want. But if you’re looking for ideas for how to make good use of the payments, we have suggestions. For other ways you save or get money this year, here’s what is happening with canceling student debt, how to see if your state has money of yours you can claim, and how March’s stimulus bill can help you save money on health care costs.

First, make a plan for how you will use your child tax credit money

Your first child tax credit check may not come for weeks, likely not until July, so you have time to make a plan for what you are going to do with the money before it arrives. You can figure out how much you can expect (overall and per month) using CNET’s child tax credit calculator by providing a few details: how many children you have, your income and your filing status.

Next, think about your financial goals for using the money. “The most important thing is to start planning now,” Emily Shallal, senior director of customer strategy and innovation at Ally Bank, told CNET. “You don’t want to look back on this money with regret and wonder what happened.”

Here are some of the ways you could plan to use the money.

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Meet your family’s basic needs

Cover your family’s — including your children’s — urgent needs first: Budget for groceries, housing, utilities and essential supplies such as medicine. You could use some of the money on a necessary car repair or a medical or dental procedure you’ve been putting off.

Pay down your ‘toxic’ debts, including credit cards

Once you’ve got necessities covered, depending on your situation, it may make sense to take on your costliest debt. “If you’re in a situation where you have a lot of what I would refer to as ‘toxic debt,’ paying those balances off should be your No. 1 priority,” Bruce McClary, senior vice president for communications at the National Foundation for Credit Counseling, told CNET. Clary said “toxic debt” includes high-interest unsecured…

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