Does the room start spinning when
your first credit card bill arrives from your holiday spending spree
and you realize the real cost of your largesse?
It's at moments like these that
many people make an earnest New Year's resolution
that next Christmas will be largely credit-card
free. But if you're like most people ...
Well, say hello again to a solution available
to most credit union members -- the Christmas club account. It is
simplicity itself -- a sweet, innocent and charmingly old-fashioned
notion that really works.
The interest you earn is modest.
But even with low interest, a club is a far less
expensive way to pay for your year-end generosity
than credit card financing.
A Christmas club account is
basic: You put aside a little bit of money on a
regular basis, it adds up during the year and you
get that money in a lump sum on a set date -- just
before Christmas. Fund it via direct deposit with
money deducted from your paycheck starting now,
and over the next few months you won't miss what
you never had.
And you're likely to leave your money in there
all year because penalties for early withdrawal, while they're not
hefty, are a good deterrent.
a little for the holidays
Kathy Egan had a clerical job at a hospital when she opened
a Christmas club account at her credit union.
Newly divorced with a toddler, she
was determined to give her son a nice Christmas.
Every pay period, $5 was deducted from her check
for the club account. At the end of September,
the money was moved into her savings account,
where it stayed until she was ready to go shopping.
"It allowed me about $130 at the end of the
year to buy my son something," she says. "It was a forced savings
to make sure I could get something for him and not have to ask my
That was 16 years ago. Now a hospital
administrator in South Florida, Kathy has nine
supervisors who report to her and three support
people. Her son is grown. But she still has a
Christmas club account. Over the years, she's
gradually increased her deduction; now, she takes
out $30 per pay period for the club account. With
interest, it gives her about $800 in Christmas
"At first, it's difficult because maybe that
$5 a pay period, you need it," she says. "But come Christmastime,
you don't have to charge things and pay interest. I don't want to
go into debt and pay for Christmas all year long."
Like Kathy, many club users like the benefit
the accounts can bring to children. Setting up separate accounts
for mom, dad and the kids is popular. And many a parent has provided
"matching funds" every time a youngster puts a dollar or two into
an account from chore money or allowances.