saved and invested their monthly child tax credit payments

Families with up to $50,000 in income have saved and invested their monthly child tax credit payments, research shows

Originally published Tue, Sep 21 2021 1:20 PM EDT | Updated Tue, Sep 21 2021 2:39 PM EDT


  • Monthly child tax credit checks of up to $300 per child are reaching millions of eligible families.
  • New data shows families’ top priorities for the first two checks were saving and investing.
  • The monthly payments are slated to end after this year, unless Congress extends them.

New data on the monthly child tax credit payments shows how parents earning up to $50,000 a year are using the extra money. They’re investing it.

The monthly checks started in July, and include up to $300 per child under age 6 and $250 per month for children ages 6 to 17.

The payments are part of the temporary expanded child tax credit, created by the American Rescue Plan earlier this 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.

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New research from Envestnet | Yodlee, a data aggregation company that provides account aggregation services, takes a look at how families with $50,000 and under in income spent the first two monthly checks.

While the expanded credit has certain income cutoffs, families in that income category are eligible for the full amount.

Envestnet | Yodlee found those families generally focused on transferring or saving the initial July payments. The second checks that went out in August mostly went to securities trades.

Consumer spending habits following Child Tax Credit payments

Payment recipients in lower income groups saw the biggest increases in bank transfers and savings after the first CTC payment compared to those who didn't get a check. After the second check, the largest relative increase was in securities trading accounts, according to an Envestnet/Yodlee analysis.

Chart shows week-over-week change in bank account spending or transfers, by household income level, compared to those who did not receive a check.

Less than $35K: Week following first payment

Consumer Spend Trends Week following first payment

Less than $35K: Week following second payment

Consumer Spend Trends Week following second payment

$35K to $50K: Week following first payment

spend trends after first payment

$35K to $50K: Week following second payment

consumer spend trends after second payment

Note: Envestnet/Yodlee analysis is based on consumer-permissioned data from financial institutions. First payment data covers the week ending 7/18, second covers week ending 8/15. Source: Envestnet/Yodlee

To get those results, the firm looked at about 1 million customers at financial institutions representing a combination of those who received the tax credit and those who hadn’t, according to Bill Parsons, group president of data and analytics at Envestnet | Yodlee.

“Broadly speaking, they saved the first and invested the second,” Parsons said.

The research only shows that the funds were moved to a securities account. It is not possible to tell for what purposes consumers were earmarking the funds, including whether it was for short- or long-term goals.

What the research shows is a distinct difference in spending trends from summer of 2020, when government stimulus checks drove a spike in discretionary spending, Parsons said.

Now, the child tax credit check recipients are more likely to use the money to pay their credit cards, insurance, mortgages or rent, he said.

However, the second check that went out in August showed an increase in investing activity. To be sure, because the data comes from consumer accounts at financial institutions, those individuals may be more inclined to invest the funds compared to other child tax credit payment recipients.

The Envestnet | Yodlee team is currently evaluating data on the September payments. The IRS announced on Sept. 15 that it had deployed about $15 billion in advance monthly payments to approximately 35 million families. Additional payments are scheduled for Oct. 15, Nov. 15 and Dec. 15.

The monthly payments are set to expire at the end of this year, unless Congress extends the program. House Democrats have proposed continuing the expanded child tax credit and monthly payments through 2025.

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