In 2022, the average American planned to spend $833 on holiday purchases, with $586 allocated specifically for gifts, as reported by the National Retail Federation (NRF).(1)
A Christmas savings account can help you save for the holidays — and keep that money locked away until it’s time to spend. But they’re not known for high interest rates, and your cash might grow faster elsewhere.
Christmas club accounts are short-term savings accounts specifically for holiday expenses.
Club accounts are deposit accounts, just like savings accounts, but they have early withdrawal penalties to discourage you from tapping into your savings before the holidays. You deposit money throughout the year and earn a small amount of interest, typically accessible in October or November via check or direct deposit.
Small banks or credit unions are most likely to offer Christmas club accounts. To make the most of them, it’s ideal to open one early in the year, such as January or February, to give yourself more time to save.
A locked savings account can make a lot of sense if you find yourself withdrawing cash intended for holiday savings. With penalties for early withdrawal, these accounts make it a bit harder to access your money, which can help you stay on track.
However, Christmas club accounts don’t usually have the best APYs, often around 0.01% and 0.25%. You can find much better APYs with high-yield savings options, which can offer rates well above 4%.
Christmas club accounts are somewhat rare, but we’ve found a few to compare.
Community Bank’s Christmas Club Account offers one of the highest APYs we’ve seen, providing up to 5.00% APY on balances up to $3,000. It credits interest at the end of the 12-month cycle, and transfers are made weekly or monthly to the account throughout the year. To open this account, you must have a Community Bank checking account.
This Christmas club account has no monthly fees and a small $10 opening deposit requirement. It allows regular deposits throughout the year, with funds disbursed in October to prepare for holiday spending. A $20 penalty applies for early withdrawals, and you’ll lose any accrued interest if you close the account before maturity. For rates, you must contact the bank.
This credit union offers a Christmas Savings Account where members can set up automatic transfers and access the funds between October 1 and December 31. Rates aren’t advertised, but Consumers Credit Union claims you can “earn a higher interest rate than regular savings accounts.” As a credit union, membership is required to open the account.
If you’re open to other options, here are some alternatives that may offer higher interest rates or more flexibility than traditional club accounts:
Compare top accounts by monthly fees, APYs and features. For a closer comparison, tick the Compare box on multiple options to see benefits side by side.
The Finder Score crunches over 250 savings accounts from hundreds of financial institutions. It takes into account the product's interest rate, fees, opening deposit and features - this gives you a simple score out of 10.
To provide a Score, Finder’s banking experts analyze hundreds of savings accounts against FDIC-reported national averages as a baseline. Accounts with rates well over the national average are scored the highest, while accounts with rates well below are scored low.
Setting aside money throughout the year can take the stress out of holiday budgeting and help you avoid using credit cards to buy gifts and rack up debt.
However, Christmas club accounts usually offer low interest rates and limited flexibility. If you’re confident you won’t dip into your holiday fund, explore high-yield accounts or traditional savings accounts.
Alternatively, you can also consider challenges like the 100 Envelope Challenge to gamify your savings or check out tips on how to save $1,000 in a month.
APY stands for “annual percentage yield” and factors in compound interest. See why the difference between APY and interest matters so much.
CDs lock in your APY and funds for a set period, while HYSAs allow easier access to your savings with varying rates.
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Learn how to earn SoFi’s high 4.00% APY with its high-yield savings account.
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If you struggle to save, you could benefit from a savings account or CD that won’t allow you to withdraw funds.
Uninterrupted compound interest accounts pay interest on your initial balance and the interest you continually earn if you don’t withdraw.
How to choose the best savings account for your situation.
Some of the top banks with the highest interest rates are Customers Bank, TAB Bank, Cloud, UFB, Bread, Bask, Upgrade, Varo and more.