It’s a term that I haven’t heard anything about in a long time.  When I worked as a teller at a small town bank in the late 1990’s, the first of January was always a busy time with people coming in to faithfully open their Christmas Club Savings account.  We had these coupon books like the old loan payment books and every week people would make their deposits into the account.  Then, every November a check would be mailed to them or sometimes since we were a small bank we would hold the check there and hand deliver it to the customer.  Those where the days.  Friendly, local customer service.

Are Christmas Club Accounts Still Offered?

Well after looking around on Google, there are some banks and credit unions that still offer “Christmas Club Savings Accounts.”   The banks and credit unions that I found offer automatic deduction from your checking account, payroll deduction, higher dividends than a regular savings account, a small charge to withdraw earlier in the year, and automatic transfer of the money saved after the  September dividend payments.

Is a Christmas Club Account a good thing?

I’m not necessarily going to say “yes” or “no”.  I am going to offer a suggestion and some helpful hints to look for if you find a bank or credit union in your area that is offering a one of these accounts.

1. Ask questions.  Some questions you might want to ask is:  Is there a penalty for withdrawing early?  What is the interest rate?  How often do you need to make deposits?  Can you make a deposit once a month, bi-weekly, or weekly?  Is automatic withdrawal offered?  Is payroll deduction offered?  At the end of the year, do they offer automatic transfer or is a check mailed out?
2. Do your homework.  Is this the right program for you?  Is there an alternative that will let you get to your money if needed without a penalty?

What is an alternative to this kind of account?

The alternative to this type of account would be to open a high yield savings account and faithfully deposit to it.  My preference and one that my family is going to do is to use an ING account to deposit each week.  We are going to label it specifically for our Christmas fund.  Then in early October, we are going to move the money over to our Christmas account and start our shopping.  This is one solution that we have found to insuring that we do not have to use our credit cards next Christmas to buy the presents.

Hope that I’ve offered some helpful advise on saving for next Christmas.  If you don’t have an ING account and would like one, just click on the ad at the top of the blog and it will take you right to their site.

Till next time,

JT Locke

The Frugal Housewife

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