Monthly child tax credit payments begin soon: Everything you need to know

It's been a tough time for families but some good news in the form of the child tax credit is on the way. Advance payments of the credit are set to hit Americans' bank accounts starting tomorrow and NBC New senior business correspondent Stephanie Ruhle has all the information you need about getting your money — and how to spend it.

The good news is that if you've already filed your 2020 taxes you're good to go, said Ruhle. "If you are eligible for the payments you'll start getting them automatically," she said. "If you are set up for direct deposit for your tax refund you'll get the money even faster and directly into your bank account.

Ruhle said that if you don't make enough money to file taxes annually, there is a form you can fill out at childtaxcredit.gov to make sure you still get the payments if you're eligible.

"If you do not want to get the advance payments and prefer to get the lump sum every year when you file your taxes, you can opt out at childtaxcredit.gov too," said Ruhle. "That way you'll get the full amount in your tax refund."

To spend or save?

Parents may be wondering if it's better to sock that payment away or to spend it now on things such as necessities or even summer vacations.

"It totally depends on your situation," said Ruhle. "This question will likely be easy to answer for most families. Of course, if you're feeling stretched, use it for essentials, that's what it's there for."

If you can save that money, Ruhle reminds us to consider the "magic of compound interest."

"If you can invest it for your child, that money will grow a lot," she said. "Even just one $300 payment for an infant could turn into more than $1200 by the time your kid goes to college and almost $45,000 by the time they retire."

Another option to consider is to save some of that money for back to school shopping.

"I hate to remind you but school is just around the corner and we'll be going back to the actual classroom instead of tuning into Zoom," said Ruhle. With inflation on the horizon, there's no better time to start thinking about those supplies you'll need to buy.

Cash for travel

If you are thinking about using some of that tax credit money to take a trip, just make sure not to plan too last-minute, advised Ruhle.

"Planning is essential for last minute travel, even if the plan is to be flexible," she said. "If you are flying this summer, travel booking app Hopper recommends making sure you book at least three weeks out so you're not hit with higher prices."

If a staycation is on the agenda, there are some great last minute deals to be had on hotels in major cities. "Try booking less than two weeks out from your intended stay for a deal," said Ruhle.

Ruhle said that even though we're all itching to get back out there and see the world, that we should stick to a budget when it comes to summer vacations. And don't forget to set aside a little money for those unexpected expenses and incidentals that always come up on family trips.

Looking ahead to the holidays

Your kid's camp may be celebrating "Christmas in July" but for parents, it's actually a smart time to start planning for the expenses that come with the holidays.

"It know it's the height of summer but the holidays will be here soon enough," said Ruhle. "The holidays happen every year, there is no reason not to plan for them."

In 2020, almost two-thirds of Americans took on credit card debt for the holidays, and Ruhle doesn't want to see that happen to you this year.

"This is a prime example of a short-term savings goal," she said. "Take the total amount you think you'll spend and divide it by the number of paychecks from now until Thanksgiving. If you save $32 each week or $64 per paycheck starting now, you'll have $600 to spend on Black Friday. And you'll save yourself a bit of a debt headache in January."

For more great money tips from Stephanie Ruhle, visit On The Money TODAY.