Understanding the Christmas Club

A Christmas Club Savings Account is a relatively painless way to save money to complete your shopping during the busy holiday season. Nearly every bank offers some form of this product. Some call them “Christmas Clubs” while others just have a basic passbook account that you can draw down for holiday shopping.

If you have never had a Christmas club savings account you should check with your local bank to see what they can offer. A traditional Christmas club savings account comes with a coupon book, similar to the style that you use to make your monthly mortgage or car payments. Each “coupon” reminds you that it’s time to make a payment into your account. These help you save a pre-determined amount of money each week through the year. These types of Christmas club savings accounts are very popular. Let’s take a look at how they work.

Determining your level of savings

The first thing to determine is when the Christmas club savings account plan begins. Most banks prefer that you start saving sometime in November. Check with your bank to see when they mail out the accrued savings and interest on their Christmas club savings accounts. This will determine when you should make your first “coupon” payment.

You will want to decide prior to opening the account how much money you want to spend on Christmas gifts. This will determine the amount that you want to draw (your principal amount) and how much you’ll be required to deposit each week to reach that goal. The accrued interest on Christmas club savings accounts is typically fairly low as the savings are anticipated to be in place only one year.

What if you miss a payment?

If you fail to make a coupon payment on a Christmas club savings account there are generally no penalties. The downside of missing a payment is that amount is not available for gift shopping. You are usually welcome to double up on a future payment, or make the missed payment up over the remainder of time you’re making deposits, but check with your own bank to verify this.


Most traditional Christmas club savings accounts are automatically liquidated at a specific time that you’ll be informed of when you open the account. The bank will then send you a check for the total amount of your deposits, accrued interest and allow you an option to open a new account for the following year. You should verify with your bank what their policies are.

A Christmas club savings account is a great way to help you not only save early for your shopping, but also allows you to set your budget well ahead of time. This is one of the many tools that might be available to you to prepare for your holiday shopping.