- Census survey looks at spending patterns related to the first child tax credit payment in July
- Over one in four recipients mostly spent their payment, while the remainder focused on debt or put the money in savings
- Spending was typically concentrated on essential goods and services such as food and child care
Summary by Dirk Langeveld
Households that received their first child tax credit payment in July mostly put the money toward debts or savings, according to recent data from the U.S. Census Bureau. However, more than one in four households spent most of the money, typically on essential goods or services.
Under the American Rescue Plan, families will receive advance payments on their child tax credits through the end of the year rather than receiving the money on their annual tax returns. The payments can be up to $300 per child.
According to the Census’s Household Pulse Survey, 40 percent of households used the money from July’s payments mostly to pay down debt. Thirty-two percent said they mostly saved the funds, while 27 percent mostly spent them.
- Spending habits varied by state, with 71.5 percent of Connecticut recipients spending the money or putting it toward debt; New Hampshire had the highest savings rate, with just 53.6 percent spending the money or paying down debt
- Lower income recipients were most likely to spend the money or pay down debt, while just 43 percent of those earning $200,000 or more did so
- Spending was concentrated mostly on essential items, including school books and supplies, food, child care, rent, and clothing
