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What Americans Will Do With Stimulus Money—and What They Should Do

Many plan to pay down credit card debt or pad their savings

In light of the financial recession that was brought on by the COVID-19 pandemic and the arrival of the U.S. government’s third stimulus check, Consolidated Credit, one of the nation’s largest non-profit providers of debt solutions, asked over 1,000 Americans how they felt about their financial standing in 2021. Consolidated Credit has been monitoring the credit card debt trends of consumers for nearly 30 years.

Overall, the survey found that many Americans have a more positive outlook in regard to their financial security this year and even have proactive plans for their upcoming stimulus check.

“After facing the financial uncertainty of the pandemic, Americans are becoming more hopeful,” said Gary Herman, president of Consolidated Credit. “If all goes well, this optimism will translate into more cash spending, boosting the economy post-pandemic.”

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According to the survey, 40% of respondents said they will use the next stimulus check to pay down their credit card debt. Of those surveyed, 27% said that they needed the stimulus to pay past-due bills, and 29% said that they will use it to pad their savings.

The data revealed that individuals with money goals are more likely to use their stimulus money on debt, and those without money goals are more likely to use the stimulus to pay their past-due bills. The survey also showed that those with structured debt resolutions and emergency savings are more likely to think that their last stimulus check was enough money to meet their financial needs. Moreover, those who reported having an emergency fund are also more likely to have less credit card debt than those who do not.

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“Emergency funds play a fundamental role in financial stability,” Herman said. “A sizeable emergency fund can help consumers avoid using credit cards during tough times and use their savings instead.” But, how does one build an emergency fund and begin consolidating their debt?

“Building an emergency fund is more attainable with a set goal,” Herman said. “$1,000 is a good place to start, and it will cover most emergencies. After someone reaches this milestone, they can take on a more personalized approach and aim to save between three to six months of their expenses.”

Herman suggests that automating savings through a direct deposit also helps those who might be having a hard time meeting their savings goals. To make this simple adjustment, consumers can ask their employer to deposit a set amount of their paycheck into separate accounts each pay cycle or you can set up an automatic transfer for a set amount every payday into a savings. I actually started this more than 20 years ago and the $50 a week really added up.

Also, look for those small expenses that can add up. For people who are still working from home, you can build your emergency fund just by accounting for any spending that you’re no longer doing during the pandemic. Costs such as gasoline, parking, public transportation, buying lunches, dry cleaning, and other expenses associated with having to go to an office can be stashed into your emergency fund. Herman also recommends that those receiving stimulus checks should aim to set aside some of the money for an emergency.

If you’re looking to consolidate debt, you should closely consider your financial situation first. “Those looking to consolidate credit card debt with a consolidation loan will need a credit score of 670 or higher and ideally less than $25,000 in credit card debt,” Herman said. “A balance transfer offer is good for consumers with a FICO credit score of 740 or higher and less than $5,000 of debt. This method also works best when consumers can pay off their balance before their 0% APR introductory period ends.”

However, Herman believes that those who can’t consolidate credit card debt on their own—due to poor credit or high debt balance—should contact a professional. Non-profit counseling agencies can help negotiate a consumers’ interest rate with their creators and help with other ways to tackle debt. Consolidated Credit also has a step-by-step guide to consolidating debt in a financial crisis with real examples on their website.

Jeanette Pavini is an Emmy Award winning journalist specializing in consumer news and protection. She is the author of “The Joy of $aving: Money Lessons I Learned From My Italian-American Father & 20 Years as a Consumer Reporter.” Jeanette is a regular contributor to TheStreet. Her work includes reporting for CBS, MarketWatch, WSJ Sunday, and USA Today. Jeanette has contributed to “The Today Show” and a variety of other media outlets. You can follow her moneysaving tips on Facebook: Jeanette Pavini: The Joy of $aving Community. Find links to her social media and her book at,