How does christmas club work

And with most celebrations, you usually find yourself opening your wallet again and again. This can put a strain on your budget and put a damper on feeling festive.

Enter: the Christmas club account. While not as well known as it once was, this holiday savings account helps you stash away money for seasonal celebrations. Take a look at current savings account interest rates. A popular way to save money for holiday shopping and spending used to be the Christmas club account.

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Each bank or credit union has its own specific details that you need to read and understand before opening the account. The main advantage to a Christmas club account is that it forces you to save money throughout the year for your holiday spending.

Because the money is in a separate account that may have early withdrawal penalties, you are much less likely to dip into it than you would be if you just left the money in your checking account or stashed cash in your home. Another advantage is that Christmas club accounts often pay higher interest rates than other types of savings accounts with similar deposit amounts.

And of course, your Christmas club savings has the advantage of helping you avoid accumulating credit card debt while doing your holiday shopping.