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Should you use your stimulus check to pay down debt or build an emergency fund?

After making sure your basic needs are met, here's how to spend your money.

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Nearly two-thirds of Americans have already received the government's second round of stimulus checks as part of the latest $900 billion Covid relief bill.

The payments — up to $600 per individual or $1,200 per married couple and an additional $600 per child under 17 — help cash-strapped Americans get by during these uncertain times. But the money is also helping people meet other financial goals.

According to a New York Federal Reserve poll, a majority plan to use this second windfall of cash to pay down debt or save. If you can meet your basic needs, using the money to lower debt or build a savings is a smart financial move but it can be hard to decide which one to choose.

Here's how to know if you should put your stimulus money into savings or use it for debt payoff.

Put your stimulus money into savings to build an emergency fund

Before you decide anything, double-check your cash reserves. Evaluate whether you have enough saved up for an emergency fund.

"If you do not already have emergency savings or don't feel confident about the amount of money you have saved, it makes sense to put your stimulus money to bulk up your emergency savings," Bola Sokunbi, a certified financial education instructor and author of "Clever Girl Finance," tells CNBC Select.

Financial experts generally suggest setting aside three to six months' worth of your living expenses in an emergency fund, but with the global pandemic putting tens of millions of Americans out of work, save what you can right now.

Lynnette Khalfani-Cox, The Money Coach® and author of Zero Debt: The Ultimate Guide to Financial Freedom, recommends saving in a cyclical manner if your income right now is inconsistent or you are seeing a dip in earnings. This means that your savings ebbs and flows with your income stream. So, if you are making half this month than you were last month, save 50% less than what you would.

Choose a high-yield savings account for your emergency fund

A high-yield savings account is a better place to stash your cash than a traditional savings because you can earn more interest while still avoiding many common fees. The Varo Savings Account offers a higher return than most other accounts right now with a starting 0.40% APY and the option to earn up to 2.80% APY.

Use your stimulus money to pay down high-interest debt

If you are comfortable with the amount of cash you have saved up for emergencies, use your stimulus money to pay down high-interest debt, Sokunbi advises.

With Americans carrying an average balance of $5,313 on their credit card(s), this is a good opportunity to make a dent in your credit card debt that carries double-digit interest rates. The average credit card APR is 16.43%, according to the Federal Reserve's most recent data.

If the direct payment money is what you needed to jump-start debt payoff, but you still need more time, consider a balance transfer credit card to save on interest and pay it down faster. The U.S. Bank Visa® Platinum Card offers an introductory 0% APR for the first 20 billing cycles on balance transfers (and purchases) so you have over a year to pay off your credit card debt without accruing more interest (after, 13.99% to 23.99% variable APR).

Most balance transfer cards require good or excellent credit (scores 670 and above) and charge a 2% to 5% fee (or a $5 minimum) for each transfer, but there are some balance transfer cards with no fee that are better suited if you have a larger debt load.

Bottom line

Use the second stimulus payment to start or increase your emergency fund if you can cover your basic expenses, such as food, housing and transportation as needed. Go with a high-yield savings account to earn better-than-average interest.

For those who already have a safety net to fall back on, use this windfall of cash to pay down high-interest credit card debt that costs you with each day that interest accrues.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.