What is a Christmas Club?
A Christmas Club, also known as a holiday club account, is a type of savings account in which people make regular deposits throughout the year. The accumulated savings are withdrawn before the holiday season to provide funds for Christmas shopping and other expenses such as travel.
How does a Christmas Club work?
The goal of a Christmas Club account is to save money throughout the year before the holiday season. Participants can choose to have the deposited amounts automatically deducted from their paychecks. In many cases, the money is transferred to the customer’s other account, such as a checking or savings account, on November 1st of each year.
These accounts help participants avoid the financial stress associated with holiday shopping and other expenses like travel. Saving this money throughout the year can prevent people from falling into credit card debt to purchase gifts. It can also aid in implementing a holiday budget.
Special considerations
While marketing and incentives associated with Christmas Club accounts and similar accounts may help savers stay motivated to achieve their goals and avoid debt, these accounts themselves typically do not pay high interest. In many cases, other types of savings accounts may help people save more efficiently and earn higher interest. For this reason, customers should be cautious in exploring their alternatives before committing to a Christmas Club or holiday club account.
History of Christmas Clubs
The first Christmas Club is believed to have been launched by the Carlisle Trust Company in 1909. The company’s treasurer, Merkel Landis, started the club with about 350 members, each contributing an average of $28.
These accounts were popular in the 1960s and 1970s but have become less common in recent years. Currently, they are more commonly offered through small local banks and credit unions.
What is the purpose of a Christmas Club?
A Christmas Club account helps consumers save money for the holiday season through automatic deposits into the account throughout the year. Saving money year-round can prevent people from going into credit card debt to buy gifts and can aid in implementing a holiday budget.
Are Christmas Clubs still popular? When did they start?
These accounts were popular in the 1960s and 1970s, but they have become less common in recent years. Currently, they are more commonly offered through small local banks and credit unions. The first Christmas Club was introduced in 1909 by the Carlisle Trust Company in Pennsylvania. The company’s treasurer, Merkel Landis, founded the club with about 350 members, each contributing an average of $28.
A real example of a Christmas Club
A recent example is the Christmas Club offered by the federal credit union for the Centers for Disease Control and Prevention in Atlanta. Customers can start with an initial contribution of $25. The account allows participants to allocate a portion of each paycheck, and the remaining balance is distributed to them on November 1st. The account does not include fees as long as money isn’t withdrawn before November 1st.
Sources for the article:
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reports, and interviews with industry experts. We also reference original research from other reputable publishers when appropriate. You can learn more about the standards we follow in producing accurate and unbiased content in our editorial policy.
The New York
Times. “Christmas Budget and Saving Money on All Your Gifts This Year.” Accessed on October 11, 2021.
Federal Credit Union for Teachers. “Holiday and Christmas Club.” Accessed on October 11, 2021.
AG Financial. “Christmas Club.” Accessed on October 11, 2021.
CDC Federal Credit Union. “Christmas Club Account.” Accessed on October 11, 2021.
Source: https://www.investopedia.com/terms/c/christmasclub.asp
Leave a Reply