Christmas Club Accounts. Why?

Christmas club accounts are bizarre. The idea is that a person can put money into this account which they will use for buying Christmas gifts. This is kind of an archaic way of saving money. This article will explore why it’s not the best idea to keep a club account and what you can do instead.


Keeping a Christmas Club account is a hassle. Most financial guru’s recommend keeping only a few bank accounts. This makes accounting for all of your money much easier. Having fewer accounts will make calculating your net worth easier. This means you’ll do it more often. Taking an account of your net worth is a good idea. It’s a time to reflect on how far you’ve come and focus on where you want to go.

Having multiple open accounts is a liability as well. What if one or more of those accounts begins assigning account minimum fees? What if one or more of those accounts begins issuing monthly fees if your balance drops below a certain amount? What if one or more of your accounts gets unknowingly terminated because of lack of use? It’s a lot to track. Managing your money in other ways besides having separate accounts is much preferable.

Instead of keeping a complicated Christmas Club account, just work a little smarter with your electronic bank accounts. Ally for instance, offers customers the ability to change the name of accounts at any time. You can also tag deposits for their purposes. You can label all the income from your side hustle to go to ‘Christmas’ or whatever you please. Managing all this within one easy to use dashboard is preferable to working with multiple bank accounts. Logging into multiple accounts gets very annoying after a while.

One very smart way to manage your money is to use budgeting software or simply an account aggregation software. There are many platforms out there which make saving simple. Personal Capital is one and Mint is another. Creating one account for a singular purpose is a pain. Let the 21st century take care of your woes. It’s also good for your financial institution to keep the number of accounts you hold to a limited number. This means less administrative work on their end.

Many banks are doing away with Christmas Club accounts for many reasons. Primarily, they see them as a hassle. They also lose money with them. These accounts need maintained all year long but only usually hold a balance for a few months. Banks don’t make money with savings accounts. They make money with checking accounts (by charging overdraft fees, primarily) and with loans. Loans are the biggest way they make money. Free savings accounts (nearly every savings account is free) typically just lose the lending institution money. Plus, ‘Christmas’ isn’t very inclusive. I bet a lot of banks are getting backlash from patrons who don’t celebrate the holiday.

For this Christmas, consider tagging your money for Christmas in a number of ways. Or better yet, keep enough money liquid that Christmas is never a surprise. After all, why should Christmas be a big saving up time? You should always have enough in liquid funds to cover a little surge in expenditures. If that isn’t the case for you, consider spending less. Christmas isn’t about presents.