If you want to start saving for the holidays long in advance, the right tools can help you get there:
Christmas club accounts. These old fashioned, short-term savings accounts are still offered by many credit unions and some smaller banks. They let you tuck away money each month and earn interest to save up specifically for the holidays and often charge a penalty for withdrawing before October or November.
Regular savings accounts. If you don’t need a penalty to motivate you to keep your hands off your savings, you can open a new, regular savings account at your bank for your Christmas funds.
Christmas savings plans. Decide how much you want to set aside each month and write it into your budget — or have it automatically transferred directly to your savings account as soon as your paycheque is deposited. If budgeting isn’t your strong suit, check out our guide on budgeting for beginners.
What are the features of a Christmas club or savings account?
While the basic structure of a Christmas club account or savings account is consistent among the financial institutions that offer them, details in the features make each one unique, including:
Interest rate. Even a small difference in interest rate can start to add up over the year.
Interest payment frequency. The more frequently interest is compounded, the more you’ll earn.
Deposit methods. These can include cash deposits, online transfers and automatic withdrawals from your chequing account.
Fees. Look for accounts that do not charge any monthly or transaction fees.
Penalties. Many Christmas club accounts will charge a penalty if you withdraw your money before the accounts maturity date, while traditional savings accounts let you withdraw at any time. Decide if the motivation of a penalty is worth the fees you’ll face if you don’t stick to your savings plan.
Accessibility. Look for easily accessible accounts. If you don’t plan to use cash for your Christmas shopping, an account linked to your chequing account will let you use your savings with your debit card.
Pros and cons of a Christmas club account
Opening a Christmas club account instead of using a traditional savings account can help some people save for the holidays, but it may not be for everyone.
Simplicity. Many credit unions will let you set up automatic deposits to your Christmas account so you don’t have to worry about it.
Savings. Planning your holiday spending in advance means you won’t have to rely on interest-accruing credit cards to buy presents.
Motivation. Penalty fees for withdrawing early can keep you motivated to stay away from your savings before Christmas.
Peace of mind. Knowing that your Christmas saving is basically taking care of itself can take the stress away from the holidays and give you peace of mind.
Inflexibility. You may not be able to withdraw from these types of accounts until October or November without facing fees, interest payment adjustments or other penalties.
Interest rates. Christmas club accounts usually offer lower interest rates than other traditional savings accounts.
Are there any risks I should be aware of?
There are just a couple of risks to be aware of if you use a Christmas club or savings account.
Withdrawal fees. Christmas club accounts may charge fees for withdrawing early, and traditional savings accounts often charge fees for making more than a certain number of withdrawals per month.
Low rate of return. Low-risk means low-reward, and savings accounts and Christmas Club accounts will provide a lower rate of return than riskier investments like stocks.
Compare Christmas savings accounts
Setting aside money throughout the year can help take the stress out of the holidays — and prevent you from racking up credit card debt. Compare savings accounts and with banks and credit unions before deciding what type of account is right for you.
Frequently asked questions
Yes, many banks and credit unions make it easy to open new accounts and you’ll be able to label them however you like — including earmarking one as a Christmas account. When the season is over, you can either close the account or keep it open for the next year.
Online statements are available with nearly all Christmas club and savings accounts. Most banks will also mail you a statement each month if you prefer a paper record.
No, these types of accounts are normally not set up to make payments, although you may find some that will allow this during the withdrawal period. Make sure to check first to see what types of fees are charged for those services.
Shirley Liu is Finder's global program manager. She was previously the publisher for banking and investments and has also written comparisons for energy, money transfers, Uber Eats and many other topics. Shirley has a Master of Commerce and a Bachelor of Media, Journalism and Communications from the University of New South Wales. She is passionate about helping people find the best deal for their needs.
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