Maximize Your Child Tax Credit: 7 Smart Spending Strategies for Parents

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Child Tax Credit payments are still coming in, but not for long. Here's how to make the most of them.

Since July, parents all over the country have been enjoying a monthly windfall in the form of the boosted Child Tax Credit. This year, the credit is worth up to $3,600 for children under the age of 6, and up to $3,000 for those aged 6 to 17. While the credit is normally paid as a lump sum in the form of a tax refund, this year, half of it is being paid in monthly installments from July through December.

Initially, lawmakers were hoping to extend the boosted Child Tax Credit well beyond 2021. At this point though, it's looking like that boosted credit may only be in place for another year at most. There's also a chance it won't last past 2021. As such, it's important to make the most of those bigger monthly payments while you're still receiving them. Here are some smart things to do with that money.

1. Pad or build an emergency fund

Having a financial cushion can help you avoid stress -- and debt -- when unplanned bills strike. It's a good idea to have enough money in your savings account to cover three to six months of essential bills. If you're not there yet, it's a good idea to stick your two remaining payments -- the ones coming in November and December -- into the bank.

2. Pay down credit card debt

Owe money on credit cards? The sooner you get rid of that balance, the less interest you'll pay. If you're all set with emergency savings, you can use your incoming Child Tax Credit payments to whittle down your debt pile.

3. Sock money away for the holidays

The holidays will be here before you know it, and the last thing you want is to have them be a source of debt. You can use some of your Child Tax Credit money to cover expenses like gifts, travel, and decorations.

4. Boost your retirement plan

Many people struggle to save for retirement because they first need to use their paychecks to address their immediate needs, and once that's done, there's not much money left over. If your IRA could use a boost, you may want to transfer your remaining Child Tax Credit payments into that account.

5. Open a brokerage account

If you've wanted to start investing for quite some time but haven't had the funds to do it with, now's your chance. Investing isn't a risk-free prospect, and you should know that buying stocks does mean you might potentially lose money. But there's also the potential to gain money, which is why it could pay to use your incoming payments to fund a brokerage account.

6. Fix up your home

Home repairs aren't always urgent, and some can be put off for months. But if you have repairs that need to be made, and addressing them will make your life more pleasant, then it pays to use your Child Tax Credit funds to make those fixes sooner rather than later.

7. Get a more reliable car

Has your vehicle seen better days? There's nothing wrong with driving an old car as long as it's safe and dependable. But if you walk to your driveway every morning wondering whether your car will actually start, you could probably use an upgrade. The money you collect from the Child Tax Credit could serve as your down payment on a replacement car that's more reliable.

This year's boosted Child Tax Credit has been a lifeline for many families, so make sure you're putting that windfall to good use -- especially since you may not see the enhanced credit beyond 2021. That said, the Child Tax Credit isn't going away. In a worst-case scenario, it will be worth less money in 2022 and it won't be paid in monthly installments, but that doesn't mean you won't get your hands on any extra cash next year.

Top credit card wipes out interest into 2023

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR into 2023! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read The Ascent's full review for free and apply in just 2 minutes.