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💡 Main takeaway:
Key takeaways
- While you can save for the holidays by funding a high-yield savings account, many financial institutions also offer Christmas Club savings accounts.
- To open a Christmas Club account, find a bank or credit union that offers one, then submit an application, set an end date, and make monthly deposits. You can withdraw the funds at the end of the term.
- Most large banks don’t offer Christmas Club accounts, but credit unions and community banks usually do.
You may have the best intentions about sticking to a budget, but when the holidays roll around, all bets are off. If you’re determined to do things differently this year, a Christmas Club account is a great option.
In the past, Christmas clubs were a popular type of savings account, and you can still find them at many local credit unions and financial institutions. We’ll explain how opening one of these savings accounts can help you stay on track, so you’re financially prepared come December.
What is a Birthday Club account?
A birthday club is a type of savings account where you can make monthly contributions. Then, a month or two before the holiday, you can withdraw the money to use on holiday purchases. Although Christmas Club accounts have been around since 1909, they are not very common now. Many people prefer to use savings accounts or charge credit cards for purchases.
However, Christmas Club accounts can be helpful in sticking to a budget. Once you open an account at a community bank or credit union, you can make monthly contributions and wait to withdraw the funds until a predetermined date, usually in October or November.
Instead of going into debt every holiday season, using a Christmas Club account allows you to shop with the money you’ve already set aside for that purpose.
Quick fact
You can use your Birthday Club funds any way you want. For example, you could open an account to save for an upcoming vacation.
How to open a Christmas Club account
First, find a local or online credit union or other financial institution that offers Christmas Club accounts. Note that some credit unions require you to be a member to open any type of account, but the cost of joining is usually minimal.
If you’re considering several Christmas Club options, compare account features to find the one that’s best for you. For example, some accounts earn interest or give you flexible deposit options, while others offer automatic deposits at the end of the term or give you free transfers.
Once you find a Christmas Club account, submit a request and make the required minimum deposit. You’ll also have to set up automatic payments (usually paid from your credit union checking account). After that, just fund the account until the expiration date (when you receive the funds).
Tips for making the most of your Christmas Club account
It’s easy to open a savings account and completely forget about it. To ensure you get the most out of your Christmas Club account, try implementing some of the following strategies:
- Prepare a budget for how much you expect to spend during the holidays.
- Set a savings goal (so you know how much to contribute each month).
- Open your account early so you have plenty of time to fund it.
- Automate your deposits so you don’t forget to make them.
- Check your account balance every month and make catch-up deposits if necessary.
- Know the early withdrawal fees, and do not withdraw your funds before your account expiration date.
Bottom line
Although birthday clubs are not as popular as they used to be, the basic concept still remains. Plan ahead and save before the holidays so you don’t fall into debt from gift-giving. Christmas clubs automatically make saving easier so you can enjoy the season without the stress of paying for it.
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