Christmas Club Account
Setting Up a Special Savings Account for Holiday Spending
Tired of over-spending during the holiday season? Set aside money all year long with a Christmas club account at your local bank or online.
An old-fashioned savings plan that will help your financial future, a Christmas club account is just like a regular savings account except for a few differences. There is no minimum balance and the funds are available beginning November 1 every year.
If you begin investing $10 a week now at a daily dividend rate of 1.35 percent (compounded quarterly), in 50 weeks you’ll have saved $500 0for holiday expenses! And you can always transfer those payments into your account automatically through payroll deduction. If you never see the money, you won’t spend it!
What You Should Know About Christmas Club Accounts:
- Many banks don’t advertise them but almost all offer them. You should talk to a teller or a manager about opening an account.
- Shop around for the best interest rates. Call or look online. If you find the best rate at an Internet bank but would rather do business locally, your bank may match or exceed those rates, especially if you are a good customer.
- Start your Christmas account in January. That way if you invest a small amount every week, you’ll be looking at a sizeable sum come November.
- Start a budget for next Christmas now, and stick to it. Even with a Christmas club account, it is easy to overspend. Plan how much you want to invest in your account. Then, whatever is accumulated by November 1st, is all you have to spend for the holidays, nothing more.
- Write a list of everyone to buy for and things they might like. You can never start this list too soon. If you find any of those items on sale during the year, buy them. Any leftover money from your Christmas club account can go toward end-of-the-year bills.
Examine Alternatives to Christmas Club Accounts:
- If you have at least $1,000 dollars to save consider a money-market account or certificate of deposit. Just make sure the CD matures at least one month before Christmas.
- Find a credit card that offers cash back. If you have a credit card that offers cash back or something similar like gift cards, save that refund for the holidays. Then you can call up your credit card company on November 1st and find out how much you have earned for the year. It just might be enough to pay for a few gifts. Just remember to pay off your entire credit card balance each month!
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