The monthly child tax credit payments started in July, and include monthly payments of up to $300 per child under the age of six and $250 for children ages 6 to 17. The payments were a part of the temporary expanded child tax credit created by the American Rescue Plan earlier in the year. In total, the expanded credit can be as much as $3,600 per child under 6 and $3,000 per child ages 6 through 17. That’s up from $2,000 per child prior to the legislation.
The research came from a data aggregation company that provides account aggregation services and it takes a look at how families with $50,000 and under in income spent the first two monthly checks. The families generally focused on saving the initial July check, and the second checks that were issued in August mostly went to securities trades.
So what does it mean? There is a distinct difference in spending trends from the summer of 2020, when government issued stimulus checks drove a spike in discretionary spending, according to Bill Parsons, group president of data and analytics at Envestnet | Yodlee. Now, the child tax credit check recipients are more likely to use the money to pay their credit card bills, insurance, mortgages or rent.
The monthly payments are slated to end after this year, unless Congress extends them.
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