What Is a Christmas Club Account?

Christmas Club Accounts Explained

Child holding a gift hugging her father who's wearing a Santa hat

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A Christmas club account is a savings account dedicated to holiday spending. It has a short life span, usually less than one year. You can use a Christmas club account to automate your savings for the holiday season.

Key Takeaways

  • Christmas club accounts are offered by some credit unions and banks, and they can help you save for the holiday season.
  • A Christmas club account is usually used for less than one year at a time, and it can come with savings limits and penalties for early withdrawals.
  • Alternatives to Christmas club accounts include regular or high-yield savings accounts, CDs, layaway and buy-now-pay-later (BNPL) plans, and credit card rewards.

How Does a Christmas Club Account Work?

A Christmas club account is a short-term savings account that’s specifically intended for holiday spending. It can help you save the money you need to pay for gifts, outings, outfits, travel, and other holiday-related expenses.

  • Alternate names: Holiday club account, holiday savings account, Christmas savings account

You can open a Christmas club account at a bank or credit union at the beginning of the year, preferably in January. You'll then make consistent payments that can be weekly, bi-weekly, or monthly, and they can come directly from your paycheck. It all depends on your budget and preferences.


You usually don't need a lot of money to open a Christmas club account. Many financial institutions require a deposit as small as $1.

Not every financial institution offers Christmas club accounts, so you may have to shop around to find one that meets your needs.

Example of Christmas Club Accounts

Let's say you want to buy an expensive gift for a family member this year. You want to give it to them for Christmas in December. You could open a Christmas club account in January and put away a little bit of money each month so that you can pay for the gift in cash when the holiday shopping season rolls around.

After opening the account, you could set up automatic deposits so that $100 transfers from your checking account to your Christmas club account on the 10th day of every month. By December, you'd have $1,200 ready to buy the gift just in time for Christmas.

Are Christmas Club Accounts a Good Idea?

You don't need a Christmas club account to save money for the holidays. Nothing stops you from opening a run-of-the-mill savings account that you can withdraw from according to your needs.

Compare interest rates to determine which is the better option for you. For example, in a high- or low-interest rate environment, a Christmas club account may have a higher annual percentage yield (APY) than a traditional savings account. For example, the average APY on regular savings accounts was 0.21% in November 2022. A Christmas club account at Founders Federal Credit Union paid 0.25% APY the same month.

Regardless, a high-yield savings account will usually always pay the highest APY. So if you're looking to earn meaningful interest every month, that may be your best bet. For example, in November 2022, CFG Bank offered 3.85% APY on a high-yield money market account.

Pros and Cons of a Christmas Club Account

  • Specific account just for holiday savings

  • Helps avoid credit card debt

  • Most accounts only allow withdrawals during a certain time

  • Saving limits are common

Pros Explained

  • Specific account just for holiday savings: A Christmas club account can simplify the process if you struggle to save money for the holidays. You can set up automatic transfers and "set it and forget it" until you need the money. It's a specific place for you to save money just for holiday spending.
  • Helps avoid debt: It's not uncommon for people to charge holiday purchases to their credit cards and accumulate credit card debt. You won't have to charge everything to your card to enjoy the holidays if you put cash away into a Christmas club account.

Cons Explained

  • Most accounts only allow withdrawals during a certain time: Christmas club accounts may only allow you to withdraw money when your term is up, typically in October or November. You'll likely be charged a penalty if you decide to take the funds out before your withdrawal period is over. For example, Rockhold Bank charges a $15 penalty for early withdrawals.
  • Saving limits are common: Christmas club accounts usually have savings limits so you may not be able to save as much as you'd like. For example, Rockhold Bank and Meritrust Credit Union both have a savings limit of up to $10,000 for Christmas club accounts.


You may be better off with a traditional savings account if you want the freedom to take your money out at any time during the year. However, an early withdrawal penalty on a Christmas club account may motivate you to keep the money untouched until it's time for holiday shopping.

How To Open a Christmas Club Account

You can find Christmas club accounts at small banks and credit unions. If you're a member of a credit union, you may already have access to a Christmas club account. And if you aren't, you can search for a credit union near you.

Credit unions typically have membership requirements, so check those out before you apply.

Alternatives to Christmas Club Accounts

Budgeting is the first step in setting yourself up for success when it comes time for holiday spending. Consider how much money you need and then start saving it, whether in an account or just in an envelope. Here are a few other alternatives to consider if a Christmas club account isn't right for you.

Savings Account

You can open a savings account at your bank or credit union. Label it "holiday spending" and contribute as much or as little money as you'd like. You can set up automatic transfers from your checking account so you don't forget.

Certificate of Deposit (CD)

A CD is a savings account that holds a fixed amount of money for a predetermined period of time and it usually pays more interest than a savings account. You can open a short-term CD, such as a six-month CD, deposit your cash into it, and keep it locked up until the holiday season arrives. The downfall with this option is that you'll need the full amount of money upfront to open the CD.

Layaway or Buy-Now-Pay-Later (BNPL) Plan

A layaway plan may be your best bet if you want to make a big-ticket holiday purchase like a television or a computer. Many stores will allow you to pay off your items in installments for free or for a small charge. Some stores also partner with buy-now-pay-later (BNPL) providers, which allows you to break up your purchase into a few payments over time. Whatever you do, make sure you read the fine print before you commit to a layaway or BNPL plan.

Credit Card Rewards

Do some research to find the best credit cards for your spending habits. You may be able to rack up cash back, gift cards, airfare points, or other rewards and then use them toward your holiday spending.

Frequently Asked Questions (FAQs)

Where can you open a Christmas club account?

You can open a Christmas club account at a bank or credit union. A Christmas club account may not be offered at all financial institutions, so you may have to shop around to find the best one for your situation.

What banks offer Christmas club accounts?

A few banks that offer Christmas club accounts include Premier Bank, BankPlus, Rockhold Bank, and American Bank and Trust. You may find Christmas club accounts offered more frequently by credit unions. A few credit unions that offer Christmas club accounts include Pen Air Federal Credit Union, America's Credit Union, Founders Federal Credit Union, and Consumers Credit Union.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. German American Bank. "Christmas Club."

  2. Federal Deposit Insurance Corporation. "National Rates and Rate Caps."

  3. Founders Federal Credit Union. "Christmas Club Account."

  4. CFG Bank. "Personal Deposit Rates."

  5. Rockhold Bank. "Christmas Club."

  6. Meritrust Credit Union. "Club Accounts."

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