Holiday Accounts Save Hassles and Headaches

For many, the end of the year is marked by a flurry of activity comprised of cooking, partying, making holiday travel arrangements-and shopping. Adding to the overwhelming list of demands is the last-minute rush to scrape together extra holiday cash.

The holiday season catches many unaware-and short of funds. Most resolve to begin saving earlier for next year, but find that their good intentions fall by the wayside and they end up facing yet another end-of-year cash shortage.

While it's easy to resolve to save big money toward next year, expenses; both regular and unexpected, have a way of eating up money intended for savings. There is, however, a fairly painless way to avoid the penniless panic next holiday season.

First, people need to be realistic about how much they can afford to save each week. Although $5 or $10 each week may seem too insignificant to bother setting aside, even these miniscule deposits, made regularly, will eventually amount to a stash big enough to relieve a great deal of holiday stress.

A number of banks and credit unions offer "Christmas Club," vacation and other holiday savings accounts, some offering interest rates as much as 1 percent higher than other savings accounts. Even those institutions that don't offer special holiday accounts usually offer basic savings accounts with low or no minimum deposits and balances, as well as competitive interest rates.

The first step is to open an account strictly for holiday savings. A separate account is essential because it's far too easy to withdraw "just a little bit" from the holiday fund when it's lumped together with emergency, school, or other savings.

Most banks and credit unions offer ATM cards for savings accounts. If a card is offered, refuse it. Having an ATM card available makes small withdrawals far too convenient. If funds are accessible only by making a trip to the bank, the likelihood of spur-of-the-moment withdrawals and early depletion of holiday savings decreases significantly.