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Christmas savings account: A young girl kisses her grandmother on the cheek while the family celebrates Christmas

Why a Christmas savings account is the gift to give yourself


-A Christmas savings account allows you to save up cash year-round specifically for holiday spending.

-Through a Christmas savings account, you can avoid taking on debt while also earning interest on your money.

-You can use a Christmas club account that’s specifically designed for holiday savings or take a DIY approach at any bank or credit union.

When Christmas is just around the corner, you want to dream of sugarplum fairies and stockings filled to the brim. But sometimes, the most wonderful time of year can become stressful if your budget is feeling pinched by all the delights of the season.

But don't worry, a Christmas savings account (sometimes called a Christmas club) can help you plan and save throughout the year to relieve the end-of-year financial stress.

We’ll explain what a Christmas savings account is, the benefits of using one, how to determine how much you should save, and more.

What is a Christmas club savings account?

Also known as a Christmas club account, a Christmas club savings account, or a holiday club, a Christmas savings account lets you create a short-term nest egg to use for your holiday expenses. The idea is that you budget and save throughout the year so that by the time you start holiday shopping you have enough money to cover the gifts, cards, decorations, and food. 

Christmas club accounts function just like a savings account, and in most cases, you get an annual percentage yield (APY) — also known as interest — that gives you some added cash on top of what you deposit.

Each financial institution will be different, but there may be a few rules tied to the account, such as a minimum opening deposit or an early withdrawal penalty. 

For example, the Rockhold Bank Christmas Club requires a $25 deposit to open the account and charges a $15 early withdrawal fee. The bank mails a check to account holders with the total savings and interest the first week of November. 

Similarly, the Christmas Club at Premier Bank requires a $5 minimum opening deposit, doesn’t allow early withdrawals, and direct deposits the funds into a regular bank account by November 1.

You can check with your local bank or credit union to see if they offer a Christmas savings account and what the rules are.

Keep in mind, even though it’s called a Christmas savings account, you can use it to save and plan ahead for any November and December holidays or celebrations — from Thanksgiving to Hanukkah to Kwanzaa. (Or even Festivus, if that’s your thing!)

What if my bank doesn’t offer a Christmas savings account?

If your bank doesn’t have a Christmas savings account, don’t worry. You can take a DIY approach. Open a savings account, a money market account, or even a short-term certificate of deposit (CD) for the specific purpose of saving for holiday expenses. 

You can put a set amount of money into the account each week or month, just as you would with a Christmas savings account. You might even be able to set up automatic transfers from your checking account or use direct deposit to send money straight from your paycheck. By the time the holidays roll around, you should be ready to buy decor, presents, and other things that brighten the holiday season.

When choosing an account to use for your Christmas savings, be sure to select an FDIC-insured bank or an NCUA-insured credit union. Also, look for features that will fit your needs. For example, you may want an account with mobile banking, online banking, or a $0 minimum balance. You can also shop around for the best interest rate.

What are the benefits of a Christmas savings account?

The major advantages of a Christmas savings account are less financial stress when Christmas rolls around and avoiding debt while still buying the stuff you need.

Avoid debt

According to one study, 36% of Americans took on debt in 2021 to buy Christmas gifts, decor, food — you name it — to celebrate Christmas. Moreover, this translated to an average of $1,249 in credit card debt.

No one loves to go into debt, but with the increased expenses around the holidays, it’s easy to do. However, if you put a little aside each month throughout the year, it makes it easier to cover your expenses and avoid debt.

Get rid of stress

You have plenty to worry about when the holiday season comes around. About 69% of people feel stressed about time and money around the holidays. On top of that, people report stress related to buying and receiving gifts, family, and travel.

When you use a Christmas savings account to prepare financially for your end-of-year expenses, you can breathe a little easier and have one less thing to worry about. The holidays can be magical, and this stress-relieving approach will almost make you feel like you’re in a Hallmark movie.

How much do I need to save for the holidays?

There isn’t a set amount you need to save for the holidays. It will depend on your personal needs and circumstances.  

One way to determine your savings goal is to look at your credit card and bank statements from past holiday seasons. This will give you an idea of how much you generally spend on gifts, food, and decorations. Essentially, you’ll plan your savings around your typical spending.

With this method, once you know your savings goal, calculate how much you need to set aside each month. For example, if you want $2,000 for the holiday season and you're going to save from January to October, you'll need to put $200 a month into your Christmas savings account.

Another option is to look at your personal budget and income to determine how much you feel comfortable earmarking for the holidays each month. You want to go with an amount that won’t cause financial hardship throughout the year. With this approach, you’ll plan your spending around how much you were able to save.

With this method, once you know how much you can afford to save each month, calculate the total amount you’ll be able to spend on your holiday shopping. For example, if you can set aside $75 per month and you’ll be saving from January to October, you’ll be able to spend $750 on Christmas.

Greenlight tip: Looking for more holiday budgeting tips for families? We’ve got the perfect guide to get you through the season.

How can I fund my Christmas savings account?

A woman in a Santa hat sits on her couch and checks the balance in her Christmas savings account on her cellphone

There are two ways to make room for Christmas savings: reduce other expenses in your budget or earn extra money throughout the year.

Technology has brought a quality of living that no one could have imagined even 30 years ago. It’s even made it easier to earn money that you can add to the coffers of your Christmas savings account. 

Some of the ways to bring in more cash include:

  • Selling stuff online

  • Becoming an Uber or Lyft driver

  • Getting an online bank account — checking account or savings account — with a higher interest than a brick-and-mortar institution

  • Moonlighting in the gig economy

Relieve stress and enjoy the season with a Christmas savings account

With a Christmas savings account, you can be ready for all the holiday season throws your way. You can avoid stress and debt by saving a little at a time throughout the year. Then, when the holidays roll around, you’ll be able to withdraw the money from your Christmas savings account to cover your spending.

Do you want to teach your kids the importance of saving for expenses and goals — like holiday spending? Greenlight helps you do just that. With a Greenlight debit card and money app, kids and teens practice smart spending and saving. They’ll learn about budgeting for the holidays if they plan on giving gifts or saving for a big purchase if they plan on splurging on themselves! Try it today — with one month, on us!

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