News News Type Press Release

New report suggests Child Tax Credit reduced usage of high-cost financial services

Press Release: April 14, 2021

St. Louis (April 14, 2022)— In a new report published with the Global Economy and Development program at Brookings Institution, researchers at the Social Policy Institute at Washington University in St. Louis and Appalachian State University found that families who were eligible for the child tax credit (CTC) experienced improved nutrition, decreased reliance on credit cards and other high-risk financial services, and made long-term educational investments for both parents and children. Researchers also found that families used the CTC to cover routine expenses without reducing their employment.

The CTC survey was administered in two waves: July 8 and July 13, 2021, immediately before the first child tax credit payments were delivered; and between Dec. 27 and Jan. 14, 2022, soon after the final payments were deposited.

The most common reported uses for the CTC were:

  • routine expenses such as housing, food and utilities (69.6%)
  • clothing or other essential items for children (58%)
  • purchasing more food for the family (55.7%)
  • saving for emergencies (49.4%)
  • paying off debt (41.8%)

Notably, the authors report that CTC-eligible households were significantly more likely to reduce reliance on high-cost and risky financial services such as payday loans, pawnshops, and reduced rates of selling blood plasma, as compared to families ineligible for the credit. This reduction was especially prevalent among Black, Hispanic, and other minority families, along with low- and moderate-income families. These results indicate the CTC may help reduce both racial financial inequality and a widening income gap in the United States.

View the full report and additional analysis at