It might be a tad late to take the suggestion this year, but intrepid money savers out there – and I know that there are many of you reading this blog! – might consider giving your credit cards a break next year by joining a Christmas Club. What is a Christmas Club, you might ask. Basically, this is a savings account that you open with a bank (or, less commonly, a drugstore or supermarket) into which you deposit at least a certain amount of money on a regular basis. The funds are saved for Christmas shopping, with the holding institution contributing a small amount of interest as an incentive for your virtuousness. Many community banks have Christmas Club accounts for their customers, and bigger banks are getting into the game as well during these lean economic times.
The principle behind a Christmas Club bank account is that, if you save a small amount of money over a long period of time, you will barely “feel” the loss of these funds as you steadily accumulate a decent sum of money towards a set purpose. Rather than charging up your plastic on holiday shopping in December and having to take an arduous amount of time to pay off all those charges with interest, you could build up that amount of money over the course of the year and pay cash for your gifts, which is always preferable.
Christmas Club accounts can be opened for very small amounts. Teenagers, for instance, might be able to deposit only five dollars a week into their account. More ambitious adults might fork over twenty or even fifty dollars a paycheck. No matter how much money you are depositing into this specialized account on a regular basis, there is a tremendous satisfaction in knowing that your money is accumulating – at the end of the term, in Decmebr when you are getting ready to go on a gift shopping spree, imagine how blissful it will feel to not have to use your credit card!
Christmas Club bank accounts are not exactly serious business, with early withdrawal fees and all that hassle. If you end up having to withdraw your cash before the holidays, you will likely just lose whatever interest or contribution that the bank was making towards your fund. Therefore there is very little risk in opening one of these accounts, which is a big advantage during these times of ever-increasing joblessness and other forms of financial heartbreak.
Of course, the alternative to opening a Christmas Club account is to utilize layaway. Once upon a time, most department stores offered this service, in which you pay for one or more items over a certain period of time –usually up to three months – in regular installments, while the store holds it for you. If you are not able to pay for the item in full, you forfeit your deposit. Layaway all but disappeared for a while over the past several years, but the tough economy has had many national chains shaking the dust off their layaway schemes to entice cash-strapped consumers into shopping with them. In this way, parents may be able to pick out toys for their children in the autumn and pay them off gradually into the month of December. To the best of my knowledge, K-Mart, Sears, and Wal-Mart are all stores that offer layaway.
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