A Christmas club account – or “holiday account” – is a specially-designed, short-term savings account that allows you to deposit funds at regularly-scheduled intervals throughout the year and withdraw those funds in the last quarter of the year to spend on holiday-related expenses.
Individuals that elect to open this type of account earn interest on the balance. If funds are withdrawn earlier than agreed to upon opening the account, the owner may incur penalties and/or fees.
This helps to discourage the depositor of said account from using the monies collected for any other purpose than that which is originally intended.
It is an excellent method for accumulating cash for holiday expenses so that debt will not be accumulated – be it loans or the usage of credit cards – when shopping for the holidays.
Popularity Reaching New Heights
In the past couple of decades, Christmas club accounts have dwindled in popularity. In fact, these types of savings accounts reached the height of their popularity within the 1960s and the 1970s; however, in recent years, these accounts are acquiring popularity at alarming rates.
This is – in part- due to the massive amount of consumer debt that currently lingers, increasing interest rates on loans and credit card usage, as well as the part-time job economic crisis.
Today, over 70% of all credit unions and banks offer holiday savings accounts.
If a systematic method of saving for the holidays appeals to you, Somerville Bank offers Christmas club accounts that will help you bypass all of the complications and expenses associated with using loans and credit cards for holiday spending.
How Did Christmas Club Accounts Start?
According to research, Christmas club accounts started in 1909. It originated with a man by the name of Merkel Landis. He was the treasurer for the organization known as the Carlisle Trust Company.
To take part in the club, it was required that each person saved – at least – $28.00.
In the first year of launch, there were a total of 350 people who became members of the club. Individuals that participated were given their savings on the 1st day of December so that they could put the money towards their shopping for the Christmas holidays.
Today, the Christmas club account works in much the same way; however, the amount that you elect to save is up to you and most financial institutions allow withdrawal earlier than December 1st.
More Savings = Less Stress
A Christmas club account allows you to save more and stress less. Most accounts allow you to earn monthly dividends on your savings.
You may qualify for free direct deposit and have the capability of putting in unlimited deposits. Many financial institutions allow for the automatic renewal of these accounts so that when the New Year starts, you can continue to save money.