Are Christmas Club Accounts Still A Good Idea? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Radoslav Cajkovic/Shutterstock December 16, 2019 Amanda Dixon Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Here is a list of our . Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Your mother probably had a Christmas club account. You might remember her faithfully depositing $5 or $10 a week all year long to save up for the holidays. This simple method of saving reached its height of popularity in the 1970s. But some people believe they’re still useful for bank customers and credit union members today. “Anything that helps people easily save money is relevant and necessary,” says Leslie Copeland, chief strategy officer at Ascend Federal Credit Union. “Our members can use a Christmas club account to save for whatever they want, like a vacation, a major purchase, or Christmas gifts. What is a Christmas club account
A Christmas club is a short-term account set up by a financial institution to encourage consumers to set aside money for the holidays. Rules and requirements for Christmas club account holders can vary from one bank or credit union to another. With some accounts, there’s the opportunity to earn interest. And at some banks, Christmas club accounts more closely resemble . There’s a penalty for any withdrawal that happens prior to a certain date during the holiday season. At Ascend, its Christmas club account isn’t that different from its traditional savings account. “Our Christmas club account has no minimum opening deposit, it earns a monthly dividend, and it’s easily accessible at any time without penalties,” Copeland says. “But for many people, it’s a psychological thing — a Christmas club is a ‘set-it-and-forget-it’ account to save strictly for Christmas presents.” Why use a Christmas club account
Many Americans have a hard time setting aside money for the future. And when the holidays roll around, it’s tempting to overspend. By opening a Christmas club account, consumers can prepare for the holiday season and manage their finances better than they otherwise would, says Mike Schenk, chief economist for the Credit Union National Association. One easy way to get into the habit of saving for the holidays, he says, is to set up direct deposit so that a portion of your paycheck is automatically deposited into your account. Having your savings in a separate account might make it easier to avoid touching those funds and spending them on accident. It might also help you avoid a credit card debt crisis when January rolls around. Most Christmas club accounts can be opened with a small deposit. At HOPE Federal Credit Union in Jackson, Mississippi, for example, the minimum balance is just $10. Where to find a Christmas club account
Some small banks offer Christmas club accounts. “They are typically community-based institutions that generally know their customers better than the big money center banks would or the retail banks would,” Schenk says. “Because of that, they’re a little bit more interested in the overall financial health of those consumers that do business with them and a little bit less focused on generating higher and higher dividends and higher and higher profits.” But credit unions, by far, are still the champions of this type of savings vehicle. According to recent data from the Credit Union National Association (CUNA), most credit union members have access to a Christmas club account. Joining a credit union is easier than ever. In many cases, if you can’t qualify for membership based on where you live, work or worship, you can probably join an organization like the American Consumer Council that allows you to become eligible for credit union membership. Before selecting a particular bank or credit union’s Christmas club account, Schenk recommends shopping around and using a website like to find a credit union in your area. Disadvantages of Christmas club accounts
A downside to using a Christmas club account is that you likely won’t earn much in terms of interest. At some banks, these accounts pay less than 1 percent APY. An early withdrawal penalty could be another obstacle. At American Bank & Trust, for instance, in Bowling Green, Kentucky, the penalty for pulling out your savings before your account matures is $20. That kind of penalty could take a big bite out of your savings if you find yourself needing the money you’ve set aside for other purposes. Of course that’s the point of the account — to make sure the funds for your holiday shopping spree are separate from the dollars you plan to use to meet other financial goals. In some cases, your bank or credit union may also cap the amount you can save in a Christmas club account. There could also be a set amount you’re required to deposit on a monthly basis. Bottom line: As with any bank account, it’s best to read the fine print and understand all of the terms and conditions before signing up for a Christmas club account. Alternatives to Christmas club accounts
Other than a do-it-yourself savings account you designate exclusively for the holidays, there are other ways to sock away money that will get you a better return on your investment than a traditional Christmas club account would. For example, you can throw in a lump sum (if you have it) into a . Just make sure the account matures before you start your Christmas shopping. Savings and money market accounts may offer more flexibility and liquidity than a Christmas club account. Plus, if you look for online options, you’re bound to find an account that pays more interest without requiring a high minimum deposit. If you opt to use credit cards, consider using one that offers . Learn more
SHARE: Amanda Dixon Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles