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December comes with additional expenses that can really impact your budget if you haven't been saving up for the holidays. Between buying gifts, hosting parties, and potentially traveling to visit family, you can easily spend hundreds, or even thousands, of dollars. Unless you have been saving money throughout the year, these expenses may wind up on a credit card. Instead of going into debt next year, enjoy peace of mind and consider opening a Holiday Club account to help you reach your savings goals.
How Club Accounts Work
A Holiday Club account is a savings account offered by many banks. Typically the account can be opened at the beginning of the calendar year and set up with automatic contributions to the account on a regular schedule, whether you choose to make them weekly, bi-weekly, monthly, or quarterly. For some, there is not a minimum required balance to open the account, but be sure to check with your financial institution. Banks often pay interest on the balance in the account throughout the year so your savings will grow.
Near the end of the year, the funds can be withdrawn so the money saved as well as the accrued interest can be used to make your holiday purchases. Always refer to the account disclosures to better understand the qualifications or restrictions before opening a Holiday Club account. Some banks charge penalty fees if you withdraw money from your Holiday Club account before the designated withdrawal period.
Advantages
The main advantage to a Holiday Club account is that it helps you to save money throughout the year for your holiday spending. Since the money is in a separate account, you are less likely to dip into it than you would be if you just left the money in your checking or regular savings account or stashed cash in your home. Another advantage is that Holiday Club accounts may pay higher interest rates than other types of savings accounts with similar deposit amounts. And of course, your Holiday Club savings has the advantage of helping you avoid putting your holiday shopping on credit cards.
