Remember Christmas Club accounts? The Clubs were popular during the Great Depression. The point of the account was to deposit money regularly throughout the year and then withdraw the funds before Christmas. The account earned interest and was probably set up like a CD. It was a great tool to take some of the stress out of Christmas shopping.
It’s so much better to prepare for the event than to go into debt with spending. The end of November is the wrong time to start a Christmas Club for this Christmas, so what can you do to minimize the damage to your wallet?
Three Months
If you must charge your holiday purchases, plan to have the bills paid within three months. You don’t want to still be paying for this Christmas when you pull your cards out again next year. When you buy items with great sales prices, all savings are lost when you drag out financing.
Plan Ahead
Don’t make holiday shopping one large impulse buy. Make a list. You know whom you have to buy for. Don’t just keep names on your list. Instead plan how much you can spend for each person and stick to it.
Don’t Carry Credit
Leave your credit cards at home if you can’t control your spending. A debit card or cash will get the shopping done without doing lasting damage to your finances. Don’t apply for new credit while you’re out either. Store cards carry high interest rates.
Read The Contract
If you make a large purchase with no interest or payments for a year, that’s a great deal. However, you must pay the balance off before the year is up to avoid finance charges.
Start Saving
Set up a dedicated account now for next year. You won’t earn much interest, but it’s better than paying high interest.