Once again the holiday season has come and gone. You already packed away the ornaments and then you are reminded of the piled up debt from the holiday shopping when the credit card statements come home. Although you tried to cap your spending, those extra-unplanned splurges didn’t come cheap. Now is the perfect time to start saving with a Christmas club, so you are fully prepared to play Santa come next December.
Although the first Christmas club (dubbed a Christmas savings fund) dates back to 1909, Christmas club accounts became exceedingly popular around the time of the Great Depression. Banks set up a type of time deposit savings account where consumers made small weekly deposits with the ability to access their money around the holidays.
Because Christmas clubs are time deposit savings accounts, there can be penalties for early withdrawal. Additionally, the interest rates aren’t exceptionally generous. However, they are a great way to avoid the temptation of spending every dime you earn and getting your money out of harms way, fast.
Christmas clubs are still available through the United States. Many banks and credit unions still offer the specialized Christmas clubs as a way to start preparing early for the holiday spending. As an additional incentive, some financial institutions offer consumers incentives, such as compounded interested for offering these types of accounts. They do so because consumers agree to invest the money for a short, but definite, period of time.
Another great way to utilize a Christmas club is to save money for holiday travel expenses. You typically put your money in a Christmas club account from January until November 1st (please verify with your bank their date and terms of agreement) at that time you can use the money you saved for any holiday expenses – including airfare so that you can to spend the holidays with your family.
