Millions of American families did not receive Child Tax Credit (CTC) payments this month for the first time since July, after Congress failed to pass the Build Back Better Act. President Joe Biden’s spending bill, which would have extended the expanded CLC through 2022, is struggling to garner support from moderate Sen. Joe Manchin, DW.Va.
Build Back Better needs the support of all Democrats in a tightly divided Senate. However, Manchin has previously said he would not support the bill unless lawmakers add a work requirement for CTC recipients. This would mean that many families who received the expanded CTC in 2021 would no longer be eligible for benefits.
Keep reading to learn more about the future of CTC in 2022, including ways parents can cut expenses as monthly payments expire. You can also visit Credible to compare offers on a number of financial products, such as debt consolidation loans and high-yield savings accounts, for free without impacting your credit score.
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Manchin will not support CTC without work requirement
The U.S. bailout, which Biden signed into law in March 2021, increased the maximum child tax credit amount from $2,000 to $3,600 per child 5 and under and to $3,000 for those aged 5 and under. 6 to 17 years old.
Extending the enhanced child tax credit through Build Back Better would potentially reduce child poverty by about 40%, according to a study by the Center on Budget and Policy Priorities (CBPP). As the Senate struggles to pass the Build Back Better spending bill and the CTC expires, child poverty rates are expected to rise.
Congress struggled to pass Build Back Better without Manchin’s support. He has previously said he would not support the bill without adding a work requirement for CTC recipients.
“I think the government should be your best partner, but they shouldn’t be your supplier,” Manchin told reporters in November. “We have a moral obligation to provide for those with disabilities, physical or mental. But everyone should be able to help and participate, so that’s my mindset.”
Manchin reiterated his stance on a work requirement to Business Insider in early January. But the Democratic Joint Economic Committee said “imposing new restrictions would cut off vulnerable families, increase child poverty and increase racial disparities, hurting children who need support the most.”
Some progressive lawmakers have also spoken out against implementing a work requirement for families to receive CTC advance payments.
“Children still need to eat — whether their parents are employed or not,” said Rep. Pramila Jayapal, D-Wash., said on Twitter.
One way for parents to prepare for unexpected expenses when CTC payments expire is to build a solid emergency fund that can cover 3-6 months of expenses. You can grow your savings faster by setting up direct deposit of your paycheck into a high-yield savings account that grows with interest. You can compare high yield savings account rates on Credible.
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3 Ways Parents Can Cut Spending When CTC Expires
With Build Back Better stalled in the Senate, many families who received monthly child tax credit payments in 2021 will have to find other ways to get by without this added benefit. Here are some ways parents can save money when CTC payments expire:
- Use current government benefits
- Find ways to reduce housing payments
- Pay off high interest debt
Learn more about each strategy in the sections below.
1. Use current government benefits
In addition to the Child Tax Credit, there are several federal programs to help low-income families who need financial assistance:
Contact your local Department of Social Services to see if you qualify for one of these programs and apply for benefits.
2. Find ways to reduce housing payments
Housing costs are an important part of a family’s household budget. If you are a homeowner, it may be possible to reduce your monthly mortgage payment by refinancing at a lower rate.
Mortgage rates hit historic lows in 2021, according to Freddie Mac. Although they have increased slightly since then, some homeowners may still be able to refinance at a lower interest rate. Refinancing your mortgage can help you save money on your monthly housing payments or pay off your home loan faster.
You can see if mortgage refinancing is right for you by checking your prequalified offers on Credible. Next, use a mortgage calculator to estimate your new monthly payments.
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3. Pay off high-interest debt
Revolving credit card debt can be a drain on your personal finances, especially if you only make minimum payments on your credit card balances. Other debts with high interest rates, like payday loans, can trap consumers in a cycle of costly and hard-to-pay debt.
If you’re struggling with unmanageable debt, you might consider seeking help from a nonprofit credit counseling agency. A credit counselor can provide you with financial education, help you set up a budget, or set you up with a structured debt management plan (DMP). They may also be able to help you negotiate the amount you owe or help you get a lower interest rate on your current debt.
Well-qualified consumers with good credit can also qualify to pay off their credit cards at a lower interest rate with a debt consolidation loan. It’s a type of personal loan that you repay in fixed monthly installments over a set period of time, usually a few years.
With personal loan interest rates currently at record highs, now may be the time to save money on paying off your monthly debts through debt consolidation. Visit Credible to compare debt consolidation loan interest rates for free without affecting your credit score, so you can determine if this option is right for you.
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