Did the holidays leave you in the hole for the new year?
Will January's bills ruin your holiday spirit? Are you determined that next year you won't blow your Christmas budget?
Now is the time to plan ahead so the 2012 holidays are merry and bright, not overshadowed by looming debt.
Starting a Christmas Club account might be the perfect way to get your finances off to the right start this new year, reports the Better Business Bureau of Detroit & Eastern Michigan, including the Upper Peninsula.
The Better Business Bureau is advising consumers to plan ahead and make the upcoming year's holiday season easier on the family finances by setting up a Christmas Club account now.
Traditionally, Christmas Club accounts have been offered at credit unions and most banks.
Customers can set aside a small amount of money every month into a savings account until the fall, when they can then start making withdrawals to pay for holiday expenses.
According to the Credit Union National Association, nearly 72 percent of credit unions run Christmas Clubs, and consumer interest in these clubs is holding steady.
"In addition to Christmas Club accounts, many banks allow customers to indicate 'special purpose' savings accounts so that the purpose for the savings account shows up as a title line on the customer's statement," said Al Fifield, Senior Vice President at PNC Bank.
"Many customers choose to have a portion of their pay directly deposited into these accounts each week or choose to have an automatic transfer from their checking account to their savings account set up either weekly, bi-weekly or monthly to help them save for specific events like Christmas," Fifield said.
Some retailers are also offering their own form of a Christmas Club that pays interest on the money you set aside with them throughout the year. However, unlike setting up an account with a bank or credit union, the money must be spent with that retailer.
"Along with taking the time to shop around for the best interest rate, it's also important to read all of the fine print that accompanies such an account," said Patrick Bennett, BBB Director of Community Relations.
"A Christmas Club account is a great savings tool throughout the year and the perfect way for families to get a hold of their holiday spending," Bennett said in a statement.
BBB recommends that it's never too early to consider budgeting for next year's holiday season and offers the following advice on setting up a Christmas Club account:
- Build a budget and stick to it. Consider how much you spent in the previous holiday season to help anticipate how much you will want to set aside every month. To help you budget for the holidays, BBB, along with ClearPoint Financial Solutions, has developed an interactive budget tool that includes a holiday spending calculator at CBBB.pr-optout.com/Url.aspx?516894x1444850x-1539348.
- Start saving now. The sooner you start setting aside money every month, the better. By setting up a Christmas Club account in January or February you'll benefit more from the interest rate and start the year off on the right foot.
- Shop around and ask around. While the interest rate on Christmas Club accounts is not typically very high, it can vary so shop around for the best deal. - Read the fine print. Christmas Clubs are essentially short term savings accounts, but there are a few details that make them different. In some cases, there might be a minimum required deposit to open the account, or a minimum amount you must deposit every month. In addition, there is often a financial penalty for withdrawing the funds before the holiday shopping season arrives.
- Automate the process. Most Christmas Club accounts allow for monthly automatic deductions from your bank account or paycheck. This helps lessen the pinch. Just make sure that you don't set aside so much that you run the risk of overdrawing on your accounts.
- Know the deal with retailer Christmas Clubs. Some stores are now offering their own Christmas Clubs. The money socked away with the business all year long can only be used at their stores, so evaluate your holiday shopping needs before signing up with a specific retailer.