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What is a Christmas Club Savings Account?

By J. Beam
Updated May 16, 2024
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A Christmas club savings account is a short-term savings account into which a person puts a set amount of money at designated intervals throughout the year to spend on Christmas shopping. This type of account is designed to help people avoid the stress and financial strain of having to come up with a lot of money around December or January to pay for holiday gifts. Many local banks and credit unions offer this type of savings account, and they often come with favorable interest rates.

Most of these accounts are opened in January. While there may be some institutions that require a minimum deposit to start, most do not. The account is left open through the end of October, at which time the owner can withdraw the money and have enough funds for holiday shopping.

For instance, if a person decides to deposit $10 US Dollars (USD) into his account each week from the first week of January to the end of October, he will have saved $420.00 USD. If that weekly deposit is doubled to $20 USD, he will have nearly $1,000 USD reserved for Christmas shopping. As an added bonus, many financial institutions offer interest compounded quarterly because the owner agrees to leave the money invested for a short, but definite, period of time.

As a rule of thumb, financial experts suggest that total holiday shopping expenses should not exceed 1.5% of a person's total income. People should select an amount for regular deposit that they are comfortable with and that meets their goals, however. The concept can also be applied to other savings goals, like saving for plane tickets for a vacation.

Setting up a Christmas club savings account is usually easy, since many banks and credit unions offer this type of account. It is sometimes possible to set up a direct deposit from existing accounts and to make deposits electronically online. Establishing the discipline to save small amounts throughout the year in a is typically much easier than coming up with excess cash all at once and much smarter than dealing with mounds of bills in January.

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Discussion Comments

By anon350994 — On Oct 09, 2013

Old Second Bank (West Chicago suburbs) does Christmas Club accounts.

By anon173012 — On May 05, 2011

I work at a credit union in North Alabama and our Christmas Club accounts earn the same amount of interest as our regular savings accounts. Only our Money Market Accounts earn a higher interest (of all our savings accounts). We also let members withdraw the money whenever they want.

The CCA works if people deposit like they are suppose to and forget it until Christmas but it is beneficial to be able to pull from it if you need to without penalty. Each credit union is going to do theirs a little different. You just have to compare in your area.

By anon141811 — On Jan 11, 2011

I belong to a credit union and they still have Christmas Club Accounts (CCA). However, they do not have a rule that doesn't allow you to get the money out whenever you want, so that doesn't keep one from dipping into it, which defeats my purpose! Also, most of the time, you earn more interest on a regular savings account than you do a CCA, so what's the point, really? --jvd9091

By anon68380 — On Mar 02, 2010

Is it true whatever you put in this account the bank will put half of what you put in the bank.

By anon42472 — On Aug 21, 2009

I cannot find a single bank in the west suburbs of Chicago that has a Christmas Club account. Any ideas? they never should have stopped them.

By anon27383 — On Feb 27, 2009

Ah, but the advantage of a christmas club account over a regular savings account (or at least, this was the case when I had one as a kid through the credit union I was a member of - I'm hoping they still have the program since I've just rejoined them) is that with the christmas club account, you can't withdraw the money you deposit until the set time period is up. So there's no possibility of sabotaging yourself.

By olittlewood — On Jan 10, 2008

my grandma used to do this every year! do banks still have this program? it's a good idea, although just a plain old savings account does the same thing!

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