On December 27th, 2020, a second round of stimulus payments in the amount of $600 for qualifying adults and an additional $600 per qualifying child was passed and began rolling out on December 30th, 2020. If you have already received your stimulus payment, there are a few ways you can start utilizing it—depending on your financial situation.

If you have not received your stimulus payment: Payments could be received as late as January 15th, 2021. However, if your status on the IRS website says “Not Enough Information Available”, it is possible you will need to claim your second stimulus during tax time. The IRS will include a Recovery Rebate Credit when filing your taxes for 2020.

The 7 Ways to Use Your Stimulus Payment

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1. Take Care of Yourself and Family

Whether this means paying for your housing, putting food on the table, or catching up on bills that are past due for necessities (such as your car loan, utilities, phone bill, etc), putting you and your family first are essential to getting through the pandemic. If you are experiencing significant hardship, don’t be afraid to communicate with your lenders and ask if they can work out a more manageable payment plan, consider refinancing or offer hardship programs to offer temporary relief.

Need additional help discussing your options to catch up on your finances or resolve some larger debt concerns? Talk to one of our partners at GreenPath Financial Wellness. GreenPath is a nonprofit that specializes in helping people get back on track with their finances and their financial counseling services are free for credit union members.

2. Pay Off High-Interest Debt

Thinking of ways to pay down high-interest debt? Putting all or part of your second stimulus payment can save you a lot of money in the long run. For example, if you were to put all $600 towards a credit card balance with an interest rate of 29%, you could save $781 in interest in one year if you were just making minimum payments[FM2] .

If paying off high-interest debt is a goal, but you don’t want to use your stimulus payment towards it, consider transferring your balance to a lower interest rate card.

Credit unions typically offer better interest rates on credit cards, so you could cut down the time it takes to pay off your credit card balance and save on interest. See our Visa® credit card options with low rates and other benefits.

3. Help Pay Your Tax Bill

If you think you will owe on your 2020 taxes, you can save this to put towards paying off your taxes. To avoid the temptation of spending your stimulus payment, you can create a separate savings account to move those funds over and use it only when you need to.

4. Make Additional Payments to Get Ahead

Getting ahead on your payments is a great way to set yourself up for future success; either paying off your loan early or giving yourself a safety net.

Make sure you are communicating with your lender that you are making principal payments, otherwise your lender will likely apply the majority of your payment towards the interest and then the principal (which is what happens when you make a regular payment).

When you want to make an additional payment and are already current on your loan, making a principal payment will make your overall balance lower and get you on the right track to paying off your loan early.

Pro-tip: It’s important to make sure you understand the terms of your loan. Some companies will charge you a fee if you make an extra payment on the loan each month, if you make a principal-only payment, or if you pay off the loan early.

5. Create or Add to an Emergency Fund

Having an emergency fund provides you with two big benefits: peace of mind, and money saved in the long run because you won’t need to turn to your credit card or take out a loan to cover unexpected expenses.

Learn more about creating an emergency fund with our 5 Steps to Creating an Emergency Fund.

6. Start a Long-Term Investment

There are many options to begin investing your stimulus payment for the long-term: CDs (certificates of deposit), money market accounts, mutual funds or stocks, and bonds. But one of the easiest ways to get started is by contributing to a 401(k). Your 401(k) contributions may be matched by your employer up to a certain amount, and over time you will have that money saved for retirement.

You can try out one of our free investment financial calculators to see the best ways to invest your stimulus payment.

Want to learn more about investing, but don’t know where to start? Credit union members receive a free consultation with our Together Investment and Retirement Services (TIRS) team. You can schedule your free consultation on our website or call the team today at 1-800-325-9905 ext. 58671.

7. Give Back to Your Community/Those in Need

Giving back to your community and those in need can look different depending on where you live.

If you are looking at ways to donate your stimulus payment to a local nonprofit in your area, visit websites like greatnonprofits.org or charitynavigator.org to find causes that speak to you.

Remember, nonprofits also benefit when you donate your time or treasures. If you are not in a financially secure place to donate your stimulus payment, there are still many ways to give back to your community. Reach out to your preferred nonprofit to ask about ways to get involved with safely volunteering or donating items.

Not Sure How to Put Your Stimulus Payment to Work?

The Center for Advanced Hindsight created a COVID-19 Stimulus Check Planning Tool that takes 10 minutes to complete and can help verify if you should have received a stimulus payment, how much it should be for, and how you might be able to plan using the stimulus payment if you’re still searching for the best way to use it.

Remember, we’ve got your back every step of the way. Together Credit Union offers a variety of products and services that can help you navigate the best way to use your stimulus payment and more. We’re ready to help you achieve your financial dreams, whatever they may be. You can learn more about Together Credit Union and who qualifies for membership.

Ready to become a member? Apply to become a member of Together Credit Union.