Save up all year to enjoy a debt-free holiday season

The holiday season is synonymous with many things, including spending. Opening a Christmas Club account is one way shoppers exercise some financial savvy during the holiday season.564cd27451017.image

According to survey from the American Research Group, the average family spends between $700 and $900 on Christmas gifts in a given year. Roughly 1.5 percent of the family budget is devoted to holiday giving. This doesn’t factor in the additional expenses of food and entertaining, as well as travel and miscellaneous holiday necessities. The American Consumer Credit Council indicates that the average American carries credit card debt of roughly $8,562, and holiday spending can add to that already heavy burden.

Setting aside funds for Christmas can help cut down on any additional debt from holiday giving. It helps to budget for the added gifts, decorations and food that make the holidays festive. Savings clubs have been offered through banks and other organizations for decades. It’s never too early to establish a Christmas savings account, and most people like to get started right at the beginning of the new year.

Although Christmas clubs have traditionally been offered through credit unions and savings banks, third-party organizations, including retailers, also offer these types of savings accounts. Such accounts may accrue a small amount of interest, and unlike accounts established with banks, the money saved must be spent with the particular retailer holding the account.

The Better Business Bureau advises that Christmas clubs are good ways to budget and help avoid holiday debt. Here are their suggestions when establishing an account.

* Build a budget. Consider how much you spent in the previous holiday season to help determine how much you want to set aside every month.

* Start saving now. The sooner you start setting aside money every month, the better. By setting up a 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. While the interest rates on these accounts are typically not very high, they 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.

* Automate the process. Many Christmas club accounts allow for monthly automatic deductions of the amount of money you determine from your bank account or paycheck. This helps lessen the pinch. Just make sure that you don’t set aside so much that you run the risk of overdrawing on your accounts.

Christmas clubs can be yet another financing tool that individuals use to help offset the additional expenses of the holiday season.

The Sun Chronicle

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