Bringing Back The Christmas Club – My Christmas Savings Strategy

Christmas happens at the same time every year, and yet somehow it always feels like it’s sneaking up on us.

When I was young (and broke) I can remember Christmas being a huge struggle. My family isn’t very large, but it sure seemed so at the time. And when I met my husband, not only did he have a huge family, but he was one of four siblings. Talk about lots of presents to buy! It would be a struggle to scrape together enough money to cover gifts for everyone, and this only got worse once I had kids. There’s always an expectation to have plenty of gifts under the tree for the young ones, even when they already have tons of stuff.

I found the secret to saving for Christmas about five or seven years ago (can’t remember which one, now), and it was so simple that I could have kicked myself. The secret to saving for Christmas is to simply save all year long.

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What Is A Christmas Club?

The struggle to have enough set aside to cover Christmas isn’t a new one. Christmas clubs were first started in 1909 and grew in popularity during the Great Depression. They were still popular when I was a kid in the 80’s and 90’s. I have a distinct memory of going with my mother to the local bank to retrieve her Christmas Club money in late November. Sometimes banks would even give out incentives to compete for the holiday savings business, like a brass token worth 25 cents to open an account (ah, inflation, how much you’ve changed the dollar amounts that incentive us).

What were the original Christmas Clubs like? Well they unfortunately weren’t the best accounts. They had very low interest rates, high fees, and high costs to the bank. They were designed to lock in your money all year-to protect you from yourself and your impulsive spending patterns. So if you wanted to try and cash out the account mid-year, they would hit you with high fees and penalties. Every year the banks would have to create checks and mail them out to all the customers, for them to use in their holiday shopping.

Given the costs and effort involved, I can see why most banks don’t offer them. In fact if you’re in your 20’s, you may never even have heard of a Christmas Club.

My now 14 year old on one of those long ago Christmases

Why This Works For Me

I can distinctly remember really struggling for Christmas when I first moved out of my parents house and needed to get all my own gifts. After all, my paycheck hadn’t gone up, but suddenly I had hundreds of dollars of extra expenses. In fact, one of the first years I lived on my own and had to buy a gift for my future husband, I remember selling off my college books to get enough money to buy a gift for him for the holidays, the Christmas before we were married. I also used to make very inexpensive gifts like a set of hot cocoa with coffee cups and chocolate covered spoons, or gift baskets of fancy bath products.

Once I saved Christmas-club style, the holidays weren’t a struggle anymore. I set my budget at the start of the year, automatically saved a little bit every week, and BAM! I had plenty of money for the holidays. If I found I didn’t have quite enough to cover everything, I would bump up my weekly amount for the next yer. And of course over time my family changed – we gained kids and nieces and nephews, and stopped buying for my husbands siblings. People were born and people passed away, changing the shopping list dramatically over time.

Nowadays it’s very hard to find a real Christmas Club. Banks have mostly abandoned them, not wanting to deal with the hassle of management and the small amounts people would usually be saving. Sometimes you can find them at a local credit union or bank, where they may call it a club account. Someone online mentioned that there are even banks that still have them! But I have an even better idea for you, with higher interest rates and easier administration.



Today automatically drafting money into different savings goals is as easy as spending a few minutes online filling out a form. There’s no need to go down to the bank to make your deposits, collect your check, get hit with penalties and fees, or get cash for your spending.

No, instead I go down the path of making my own Christmas Club using my high-yield savings account. I go with Capitol One 360 personally, (if you’d like to check them out, would you use my referral link to say thanks?) because it lets me open multiple accounts with different names for different goals. You can actually have up to 25 total accounts with them! You can even name them whatever you want. I have accounts named “College Fund”, “Christmas Club”, and “I Hate My Mortgage”. Lol.

Honestly though, you can do the same thing using any savings account. Smarty Pig offers something very similar, with even higher rates than Capital One at 1.15% APY as of this writing.  You could even create a vacation fund, car replacement fund, or other savings goal fund while you’re there. I’d recommend checking a reputable source like Magnify Money to see what’s the highest yielding option for you. Might as well earn a few dollars in interest on your Christmas Club money, right?

Another alternative to using a high-yield savings account might be to use an app like Digit or Acorns (no, these aren’t affiliate links, they’re just apps that might be helpful). They help you save small amounts all year long, so at the end of the year you’ll have a pile of cash waiting for you for the holidays. It’s so awesome to have one less thing to worry about when December rolls around (like it does every. single. year).

If you haven’t tried this before, why not set it up right now for next holiday season? Just open an account right now, either with your current savings account provider, with a high yield account, or with one of those apps. If it’s a savings account, figure out your target holiday budget, divide by 52, and set up an automatic weekly transfer. You could also set it up biweekly or twice a month, depending upon when you’re paid.

How do you pay for the holidays – do you save all year like me, or just budget it into December? Let me know in the comments!

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6 thoughts on “Bringing Back The Christmas Club – My Christmas Savings Strategy”

  1. We use YNAB, the budgeting software, and have virtual envelopes all year long, so we see how much money we’ve saved in our “Gifts: Christmas” category. We’ve learned, over the years, that we have to start saving money in January and not touching it! (the hard part) to save enough, because I love gift-giving. I had heard of Christmas clubs, but it’s been awhile! I know others used the concept of lay-away, which seems way less fiscally responsible than savings clubs! Your idea of using CapitalOne 360 is a great idea. That’s where we have our savings accounts, and I love that you can start separate savings “accounts” within your savings account for different goals.

  2. I have an amount I spend per relative (mom, dad, step mom, sister, brother) and per friend. Plus work, holiday food, treating for meals out, or ‘hostess gifts’. My general estimate is ~$1000.
    I save a good portion of my paycheck each month and have my general number in mind that may need to come out of savings. I also buy items as I see them throughout the year which spreads out the cost.
    Last year I gave fancy olive oil and basalmic vinegar pairs to many people. I have too much stuff, so do my friends and parents. Why not give something that can be used up? This year, I toured local distilleries and got gifts. There are usually gifts cards for my siblings, some I get with credit card rewards points.

    I’m glad the savings plan works well for you. I’ve used the extra account to keep my quarterly and yearly taxes for my house separate.

    Wishing you and your family a very Happy holiday season!

  3. I love the “I hate my mortgage” savings account, lol!

    Great idea to set up your own version of a Christmas Club Account, with a higher interest rate than the ones that were available through banks years ago. I actually had a Christmas Club account at the bank in the past. It did help to set aside money all year for the holidays.

    I’ve been thinking of using the money I get from rebate apps for help with buying gifts, too. Currently using Rakuten (formerly Ebates) for that. Just started using Receipt Hog and Job Spotter, too. Hopefully I can build up a nice supply of gift cards by next Christmas!

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