Understanding and using banks

Christmas clubs

Known these days as a bit antiquated or a catchy attractive club fro saving your money, Christmas clubs are basically a bank’s way of getting you to do what you should already be doing – saving and thinking ahead. By putting money aside all year long for a known future expense, you are in essence saving and planning ahead as you would fro an emergency fund perhaps. The idea behind a Christmas funs is that you are saving money in an account at your bank for a time you know you will need it for sure - Christmas. These days, there are many different religions and persuasions that you might just want o consider the concept of this savings plan instead of it old school given name. Maybe the name Holiday club is more updated. Anyway, just hear out the concept and adjust it to your life accordingly.

You know Christmas will be coming every year at the same time, if you celebrate this gift giving holiday, you know it can be expensive. The last thing you should do is go into debt for it. After all, this is a debt free site that explains ways to avoid debt not get into it.

How they work

In most cases, Christmas clubs start up in the month of October (a year in advance, obviously not two months). You agree to deposit a fixed amount of money each week into the club savings account, where your money earns the typical rate of interest that most regular savings accounts do. After you make all of your deposits called payments for one year, your bank pays you a bonus based on the amount of money and terms of your year long agreement. Often times, this bonus is the amount of your last payment. So, the more you save the bigger the bonus will be for you. These accounts are simple and they are a great idea fro setting money aside for the Holidays. It earns interest, plus you get a bonus. If you add $20 a week at 52 weeks, you will have a nice chunk of money set aside for the Holidays that earns interest and an extra $20 bonus.

Honestly, there is nothing wrong with using a Christmas club, but these funds are not really special either. They have been considered a great marketing tool for banks to attract savers more many years. But, there is absolutely noting wrong with simple planning ahead. Think of it like this, by joining this simple savings club, you will earn interest on every gift you buy.

Worth mentioning: One way banks make small personal loans is by issuing credit cards. Because credit card loans are unsecured and have a high default rate compared to other sorts of loans, the interest rate is usually quite high on these bank-offered credit cards. Again, saving on your own and having that money make money for you is a much better way to go don’t you think. So, while Christmas clubs may not be any major draw, they are smart and the terms are easy.

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