Banks That Offer Christmas Club Accounts

The holiday season is a time for friends and family to make memories, throw parties, and exchange gifts. But being on a tight budget can quickly put a damper on that festive feeling and make holiday shopping for your loved ones all the more difficult.

If you haven’t planned and set money aside for the increased holiday spending, you might find yourself wondering how you’re going to make ends meet or. Or worse still – you might face a lot of credit card debt come January.

Better financial management is where Christmas club accounts come in.

Having reached the height of popularity in the 1970s, Christmas club accounts were designed to encourage customers to save small amounts of money over the year. In turn, this can help manage the financial stress come the holiday season.

If you’ve never heard of a Christmas club account before now, you’re certainly not alone. Many banks and credit unions discontinued these types of holiday savings accounts over the past few decades.

Instead, they opted for alternative short-term savings accounts, money market accounts, or CDs. However, some still keep them to motivate their customers to save up before the holidays.

What is a Christmas Club Account?

A Christmas club account is a short-term bank account with penalties and restrictions on withdrawals to put you off spending your savings before the holidays come around. These accounts are structured to encourage customers to save a little bit at a time.

Small deposits are usually made weekly or monthly by direct deposit or auto draft from your checking account, so you won’t even have to think about it. All you’ll need is your account number and your routing number, and you’ll be all set.

How Do Christmas Club Accounts Work?

The idea here is to impact your day-to-day spending as little as possible while still allowing you to build a small nest egg by the end of the year.

The rules that come with these types of accounts vary from one financial institution to another. One thing most of them have in common is penalties should you withdraw funds before the stipulated date.

Bear in mind that interest rates on Christmas club accounts are usually lower than those offered for regular savings accounts.

The discrepancy in interest rates is because banks target people who want to keep a portion of their savings specifically for the holidays. Here, it’s essential to consider the added deterrent of withdrawal restrictions to reduce the temptation of dipping into funds before the holidays.

Once the cut-off date for the penalties and withdrawal restrictions on the account has lapsed, you’ll be able to spend your savings and any interest you’ve accrued penalty-free.

Which Banks Offer The Best Christmas Club Accounts?

Your best options for Christmas club accounts are small community-based banks or credit unions.

Community-based banks are usually more focused on their customers’ financial health and less on their bottom line. As a result, they are more likely to have accounts tailored to these specific customer needs.

Most credit unions also offer holiday savings accounts or Christmas club accounts. Here are some banks and credit unions that are offering Christmas club accounts:

American Bank & Trust Christmas Club Account

The Christmas club account offered by American Bank & Trust comes with plenty of ways to make setting money aside easier. You can set up weekly or monthly automatic transfers from your checking account or transfer money directly through online or mobile banking.

Their Bank My Change feature allows you to put money aside with every debit card purchase made through your American Bank & Trust checking account for hassle-free savings.

The account comes with no monthly service fees but has a minimum opening balance of $10. Unlike most other Christmas Club Savings accounts, interest on this account is compounded annually instead of daily or monthly. As such, your money will grow at a slower rate. Penalties for early withdrawal from this account include a fee of $20, loss of any interest accrued, and closure of the account.

Pen Air Christmas Club Account

Pen Air Federal Credit Union primarily serves civil servants, active and retired military, and their families.

That said, anyone can join if they become members of the Friends of the Navy-Marine Corps Relief Society.

Account opening is not available online, so you will need to contact them by phone or visit one of their branch locations to open an account.

The minimum deposit to open this type of account is $25. Still, Pen Air allows you to set up recurring deposits from an account of your choice, so you won’t need to worry about making further deposits directly.

Funds and interest are automatically deposited into your primary savings account on November 1st, so you can quickly get a head start on your Christmas shopping. Should you need to dip into your savings before they are released, you can do so at a $10 penalty charge.

Security Service Club Savings Account

Security Service Federal Credit Union offers a Club Savings Account to its members. Membership to this Credit Union is limited to people living, working, or volunteering in Texas, Colorado, and Utah, along with those who have an established affiliation to the Security Service. The minimum balance required to open an account is just $5.

Furthermore, you can make additional deposits at any time. Interest compounds daily with an APY rate of 0.05%, which is on par with the national average.

Further to this, you can open an account online, and there are no monthly fees.

This Club Savings account automatically converts to a basic savings account on November 1st, allowing customers full access to their holiday savings in time for the festive season.

Withdrawing funds before October 31st will result in account closure. You will also have to forfeit any interest earned for that month.

Consumers Credit Union Christmas Savings Account

You must be a member of the Consumers Credit Union to open the Christmas Savings Account they offer. This account has no minimum opening deposit requirement. It can be opened online, in one of their brick and mortar locations, or by calling their customer service lines.

You can set up monthly automatic deposits to take the stress out of setting money aside for the holidays yourself. Funds and any interest in your account are available for you to spend via online banking between October 1st and December 31st, penalty-free.

Spending from this account will become restricted again as of January 1st to help you start the saving cycle again for the following year.

Early withdrawals come with a penalty fee, as with most accounts of this type. Still, they don’t advertise a full breakdown of the fees on their website, so you will need to contact their customer service agents before making an early withdrawal.

Pros & Cons of Opening a Christmas Club Account

Having an account specifically designated to help you save for the holiday season can be helpful to some people. Here are some of the pros and cons of opening a Christmas savings account:


  • If you find it challenging to reach your savings goals, an account like this can help you save without feeling the pinch that comes with setting aside large sums of money at one go.
  • This type of account can motivate you not to dip into your savings before the holiday season. The penalties that come with an early withdrawal might force you to re-evaluate your spending habits to avoid paying the penalty to access your own money.
  • Having money put aside for the holiday season gives you peace of mind and can keep you out of credit card debt and away from overdraft fees.



  • Christmas club accounts typically come with a low APY (Annual Percentage Yield) compared to CDs and other online savings accounts.
  • The financial institution sets hefty withdrawal penalties for accessing your savings before the maturity date. You might have to pay a penalty fee, lose accrued interest or potentially have your account closed for early access to your money in the case of an emergency.

How to choose the best Christmas club account

  • Interest rate and how frequently the interest compounds. The slightest increase in interest rate percentage and the more often interest compounds, the more you’ll earn by the end of the account term. Always shop around to make sure you’re getting the best possible rates.
  • Depositing options. Make sure to opt for an account that accepts cash deposits, online transfers, and automatic transfers from your checking account. The more depositing options you have, the easier it is to ensure you don’t give in to the temptation to skip deposits.
  • Lower penalties. Christmas savings accounts or Christmas club accounts will usually be structured similarly and come with early withdrawal penalties. These penalties are meant to stop you from dipping into your savings before the account has matured. Should an emergency crop up, having lower penalties or fewer restrictions will help ease the blow
  • The fine print. Save yourself a lot of hassle and make sure you know the full details before you commit to an account. Read the fine print and any disclosures available on the financial institution’s website beforehand.

Alternatives to Christmas Club Accounts

Whichever method of holiday savings you go for – be it a Christmas club account, a regular savings account, or an envelope of cash – setting money aside is a good idea.

Here are a few alternatives to Christmas club accounts:

  • Online Savings Account: If you don’t want to be limited by Christmas savings account restrictions, you could designate an online-savings account exclusively for the holidays. You can still set up automatic transfers from your checking account, and you will most likely get a higher rate of return. There is also no need to pay fees to the bank for withdrawals, giving you far greater flexibility. You can also use online APY calculators to work out exactly how much money you’ll have come the holiday season.
  • High Yield CD: If you have a sum of money that you would like to grow in time for the holidays, your best option might be a CD (Certificate of Deposit). Make sure to plan ahead and identify the maturity date of the CD to ensure that your funds will be available in time for the holidays.
  • Money market account: An MMA is likely to give you far more flexibility than a Christmas club account. Browse online or speak to your favorite financial institution to find one that offers a high-interest rate so you can earn more on your savings. If you trust yourself not to overspend, you can even consider linking your account to a debit card. You could potentially earn cashback and gain access to withdrawals through ATMs should you find your back against a wall.

Shop around to ensure you’re getting the best deal possible and that you’re choosing a reputable, FDIC-insured financial institution to keep stress at bay as much as possible.