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Here's how Americans used their first Child Tax Credit payment

Yahoo Finance’s Denitsa Tsekova breaks down Americans' use of the Child Tax Credit payment and when to expect the next payment.

Video Transcript

[MUSIC PLAYING]

BRIAN CHEUNG: Half the money from those child tax credit payments have gone out to families already. The second half will be arriving later this month. But we're starting to get a picture of how Americans spent at least the first half of that payment. And for more on that, let's bring in Yahoo Finance's Denitsa Tsekova, who has a little bit more detail on exactly where that spend went. Denitsa.

DENITSA TSEKOVA: Yeah, so what we're seeing from the very first numbers we have from the first payment of the child tax credit is that the most common way Americans spent is to actually pay down debt. And this is especially the case for lower-income families. 40% of all families said they spent the payments towards paying down debt. The second most popular way was for the money to go to savings. And then 27% of Americans said that they actually spent it.

This is all, of course, according to the latest data we have by the Census Bureau and their Household Pulse Survey. These findings are similar to what we've seen with the stimulus checks. All three rounds, [? fair, ?] big amounts of the payments has went to paying down debt. And when we talk about debt, it's important to say that, at least for the CTC payments, the most common debt categories family used the payments for were food, utilities, clothing, as well as credit cards and student loans. And those same categories we see when we ask what those families spent their money on.

We also see school and book supplies as a place where those parents spent their CTC payments. And it was largely low-income families that used the payments to pay off debt. Households with income below $25,000 a year, for them it's most common to use the payments for paying off debt. And then the higher the income, the less likely the household is to use the money toward debt and more likely to spend it or save it.

KRISTIN MYERS: So Denitsa, what's coming up next for some of those CTC payments?

DENITSA TSEKOVA: Yeah, as a reminder, the Internal Revenue Service began issuing them last month, July 15. One of the payments has been out. Around 35 million households have been reached by those payments, just around 65 million children. The next payment is coming out on Friday. Those payments are going through December.

They're a total of six payments. And they're $250 for older children and $300 per child under 6. And this is, of course, part of the one-year expansion of the credit. But it's important to say that currently through Congress there is more legislation trying to extend that credit for much longer, and I'm talking about the $3.5 trillion budget proposal by Democrats and the Biden administration.

That includes an extension of that expanded program through 2025. And the framework of that was approved by the Senate on Wednesday, and it's now drafted by [? committees. ?] So we're yet to see if this one-year expansion is actually going to turn into a long-term program.

BRIAN CHEUNG: All right. Yahoo Finance's Denitsa Tsekova, thanks again for breaking that down.