The Christmas 2010 season
Though it may seem early to start thinking about saving quick cash for Christmas 2010, many people are already considering the cost. The recession of 2009 made people think twice about their finances. Credit card lenders proved to be unreliable throughout the economic downturn and people had to rely on their cash reserves to make their monthly expenses. Christmas 2009, overall, was a bleak one with many consumers having to cut back drastically on their spending. To avoid the crunch, many consumers are looking for saving options and starting their plans now.
Budgeting in advance
According to Alison Southwick, BBB spokesperson, “Budgeting wisely can greatly reduce the holiday hangover that many overextended families’ experience. A Christmas Club account is a great tool for gradually socking away money throughout the year to spread the financial burden of holiday spending.” The Christmas Club account is the latest tool consumers are turning to as they try to ease the pain of holiday spending.
In the past the Christmas Club account was offered at credit unions or community banks. It’s a savings account that allows holders to deposit small amounts over the year and then withdraw the funds in the fall. There are 78% of credit unions in the US that offer the accounts, according to the Credit Union National Association.
Retailers are joining in the savings plan
Retailers are now realizing that they need to keep up with the financial strain of their customers and changing their own products. Some retailers are offering their own form of the Christmas Club account. The good thing about these accounts is that they offer a place to not only place money, but they also earn interest as well. Of course the stipulation is that the money has to be spent at the retailer holding the account, but it’s proving to be a convenient way to save for the holidays.
The terms for Christmas Club accounts vary widely among retailers. Some allow withdrawals in early fall, while others require the money to be left alone until December. Some also offer higher interest rates than others, so it’s wise to do some searching. For consumers who are worried about having enough quick cash when the holidays come near, these accounts are very helpful.
Understand the fine print
It’s crucial that applicants understand the terms of an agreement when it comes to Christmas Club accounts. Some require a minimum deposit to open the accounts and require a consistent monthly deposit. This can be a good tool for those who are particularly disciplined when it comes to savings. They can treat the deposit like another expense and keep up with payments. The accounts are a lot like Certificates of Deposit that banks offer. They have an interest rate, varying deposit requirements and there is a penalty for withdrawing the money prior to the end date of the contract.
The cautions of Christmas Club accounts
The terms are the most important thing for consumers to watch when it comes to Christmas Club accounts. Also, consumers should make sure that the retailer they choose is a good fit for most of their holiday shopping. Overall, the accounts are great tools to have quick cash for spending and with a little research they can help any family make it through the expense.
Very good article. From what we've seen over the past years, it's crucial to start saving as soon as possible, no matter the reason. It took me years to figure it out, but I'm glad I'm finally getting it down. The truth is Christmas time can be exciting and dreading at the same time. Shucks, it's the only time of the year I find myself completely broke. LOL. Now I try to start saving for Christmas at least 6 months prior to the actual date. I was not, however, aware of the Christmas Club account option mentioned in this article. I think it's great that financial institutions are actually providing a way for consumers to save specifically for Christmas and, even better, have the ability to earn interest, as well. That's some sweet saving! Thank you so much for the info!