Did the
holidays leave you in the hole for the new year? Did January’s bills ruin your
holiday spirit? Are you determined that next year you won’t blow your Christmas
budget?
Now is the
time to plan ahead so the 2012 holidays are merry and bright, not overshadowed
by looming debt. Starting a Christmas Club account might be the perfect way to
get your finances off to the right start this new year. Better Business Bureau
is advising consumers to plan ahead and make the upcoming year’s holiday season
easier on the family finances by setting up a Christmas Club account now.
Traditionally,
Christmas Club accounts have been offered at credit unions and most banks.
Customers can set aside a small amount of money every month into a savings
account until the fall, when they can then start making withdrawals to pay for
holiday expenses. According to the Credit Union National Association, nearly 72
percent of credit unions run Christmas Clubs, and consumer interest in these
clubs is holding steady.
Some
retailers are also offering their own form of a Christmas Club that pays
interest on the money you set aside with them throughout the year. However,
unlike setting up an account with a bank or credit union, the money must be
spent with that retailer.
“Along
with taking the time to shop around for the best interest rate, it’s also
important to read all of the fine print that accompanies such an account,” said
Michele Mason, Pres/CEO BBB of North Alabama. “A Christmas Club account is a great savings
tool throughout the year and the perfect way for families to get a hold of
their holiday spending.”
BBB
recommends that it’s never too early to consider budgeting for next year’s
holiday season and offers the following advice on setting up a Christmas Club
account:
Build
a budget and stick to it. Consider how much you spent in the
previous holiday season to help anticipate how much you will want to set aside
every month. To help you budget for the holidays, BBB, along with ClearPoint
Financial Solutions, has developed an interactive budget tool that includes a holiday
spending calculator.
Start
saving now.
The sooner you start setting aside money every month, the better. By setting up
a Christmas Club account in January or February you’ll benefit more from the
interest rate and start the year off on the right foot.
Shop
around and ask around. While the interest rate on Christmas Club accounts is
not typically very high, it can vary, so shop around for the best deal.
Read
the fine print.
Christmas Clubs are essentially short term savings accounts, but there are a
few details that make them different. In some cases, there might be a minimum
required deposit to open the account, or a minimum amount you must deposit
every month. In addition, there is often a financial penalty for withdrawing
the funds before the holiday shopping season arrives.