Having a Christmas Club Account Through Your Bank: Are They Worth It?
One way that you can do this is to make a simple phone call or stop by your local bank, and inquire about a Christmas Club account. A good number of banks offer this service to their customers. Most Christmas Club accounts can be easily customized to fit into your weekly or monthly budget, allowing for the money to be deposited without you even missing a penny.
When you are looking into opening a Christmas Club account, be sure to ask what other sorts of helpful features go along with it. For instance, the bank that I use offer these accounts with no minimum balance requirements, competitive interest rates, direct deposits (taken straight out of the paycheck, with the deposit amounts specified), one free withdrawal of the funds, and no monthly maintenance fees.
Consider this: Let's say that you choose to open a Christmas Club account, and your bank offers close to the same features as mine does. You can open the account during the first week in January, with say, a fifty dollar deposit. Now you can set it up to where twenty dollars can be direct deposited to the Christmas Club account out of your weekly paycheck. That's fifty dollars (with the initial deposit), plus an extra twenty dollars a week for forty eight weeks. This will allow for withdrawing the money in the account the first week in December for your Christmas shopping. Without even adding up any interest that your account may have accrued, that gives you a little over a thousand dollars to spend for Christmas!
There are times during the year of course where you may not have the extra twenty dollars to put into your Christmas Club account, but with a quick phone call to your bank, you can stop the deposit for that week and then reinstate it once your finances are back on track. However, it's easier if you don't even add that twenty dollars into your budget for other spending. If you don't count on it, then you'll never miss it.
Getting a Christmas Club account started at the beginning of the year will take a lot of stress off of the holiday season for two reasons. The first being that you will know, before Christmas even rolls around, that you will have the money already set aside for shopping. The second reason is that you can roughly estimate what your budget will be for shopping, and that will make it easier to stick to. Don't find yourself running short of funds next year, and don't worry about having to charge all of your purchases to a credit card. Look into opening a Christmas Club account with your bank, you won't be disappointed. It's a good investment.
Published by Rhonda Nieman
I am a full time Wife, Mom, and Writer. I enjoy seeing my family happy and still being able to be here for them. Freelancing gives me that opportunity. View profile
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8 Comments
Post a Commenti actually know someone that doesnt even celebrate christmas but does this every year ... to help her pay her elec/gas bill for the winter months.. she gets a nice check puts it on her bill which puts her in the positive (gives her a credit) and its one less bill she doesnt have to worry about for maybe 3 months ... she says it makes her feel good because she doesnt notice the little amount that comes out of her check each month unless she thinks about it ... and then it feels like she has no bill as if someone paid it for her ..even-though it's her money
If you just left the money in your savings account you would still have "over a thousand to spend". You are only going to make a few dollars overall interest compared to leaving it in your savings with all your other money or investing in other ways. Is it really worth a few dollars to go bother with your work hours, take the extra gas for the drive, etc to take the time to go down to the bank? Budget yourself so that you know whatever liquid money you have in the bank includes this $500-$1000 imaginary amount.
I meant "savings account", of course....and got cut off in mid sentence. I was saying : Your money would be tied up in the Christmas Club account for the entire year, and if something happened and you needed to take the money early, there could be a fee for that, but more importantly...they place their "interest" payment as the very LAST payment for your CC account, so early withdraw means ZERO interest earned. Besides...a CD would likely offer a better rate if you were looking to "invest" your money. This is all about saving a little extra for Christmas gifts, and I think it's an awesome idea!
Another thing many banks do(including mine and the previous 2 I had at previous locations), is rather than pay a tiny interest rate that is truly insignificant, they pay the last payment in your Christmas Club book. So...if you have a 500 dollar CC account, they pay the last 10 dollar payment. If you have a 1,000 dollar account, they pay 20 dollars. It still doesn't sound like much, but I just looked at the top 25 banks in the US, that are listed with the highest savings account % rate. The highest was 1.35% a.p.r. That's 270.00 on a 20,000.00 savings account (not compounding the interest). The Christmas Club lasts for 48 weeks, rather than 52, and yet the interest rate would actually be 2% a.p.r. The bank would pay 20 dollars on a 1,000.00 Christmas Club if they did so in the manner mine does....so 1% of 1,000 is 10 bucks....they pay 20, which is 2%. It wouldn't be reasonable to use this as your "checking account" though :O) lol....Your money would be tied up in the CC account for the
Thanks everyone for your comments! I really appreciate them. :) I'm glad that you found the article informative and helpful.
I had one of these years ago. I didn't know banks still do them, but they are a wonderful idea. Maybe it is time to start one again!
Christmas Club accounts used to be a lot more popular, but with the way that debt is today, more people should consider them again. Good article!
I like the Christmas Club account because my license plate renewal comes right about the time I get the bank's check.